If you are unable to make the mortgage payments on your home, there is a strong chance your lender will notify you of foreclosure. Learning that your home is going to be foreclosed on can be a very emotional and unpredictable moment in your life. You may be feeling betrayed, confused, angry, and overwhelmed.
It is important to understand the various ways that foreclosure can affect your life. A Cleburne foreclosure lawyer can help you navigate this complicated process.
Foreclosure is a legal process that allows a mortgage lender to sell a property in order to satisfy debts that the property owner owes. An experienced asset attorney can help you determine what type of foreclosure you may be facing. There are essentially two primary forms of foreclosure that could happen to you as a result of owed debts. These are:
- Non-Judicial Foreclosure: In this form of foreclosure, the lienholder is allowed to sell the property in question without filing a civil case against the homeowner. This is also known as a “power of sale” foreclosure, as the lienholder must have a deed of trust with a power of sale clause that gives them the authority to sell the property. The Texas Property Code governs these types of foreclosures.
- Expedited Foreclosure: When a foreclosure involves certain elements like reverse mortgages, home equity loans, or property owners’ association assessments, it may be necessary for lienholders to use judicial foreclosure. Sometimes, lienholders can apply for an expedited foreclosure, which is sometimes called a quasi-judicial foreclosure. If approved, the expedited foreclosure simply moves the process along similar to a non-judicial foreclosure.
Aside from these types of foreclosure, there is also judicial foreclosure. However, this is exceedingly rare in Texas and unlikely to affect you.
Being foreclosed on has the potential to cause some irreparable damage to your life, particularly to your financial future. It is vital to your finances that you consult with an experienced foreclosure lawyer once you realize foreclosure is in your immediate future. Having someone in your corner who understands what’s at stake and can provide you with consistent help could only benefit you in the long run. Here are some of the ways foreclosure can affect your life:
- Credit Score: Foreclosure can wreak havoc on your overall credit score. When you lose a property from foreclosure, your credit score will likely drop nearly 300 points. It can take years to bring your credit score back to what it used to be, and it may take hundreds of timely payments on secured and unsecured debt like credit cards and vehicle loans.
- Purchasing a Home: It can be supremely difficult to purchase a home if you have a past foreclosure on your record. Mortgage lenders may require you to wait years before you are even considered a reliable applicant for a new home mortgage. If you are able to explain why you were foreclosed on, you may be able to avoid some difficulties, especially if the foreclosure was totally or at least partially out of your control.
- Tax Issues: The Internal Revenue Service (IRS) considers borrowed money that has been left unpaid as taxable income. If a lienholder forecloses on your home and is unable to recoup the full amount of their investment, you may be required to pay taxes on the deficiency, as it is legally considered income. Speaking with an experienced foreclosure lawyer can help you manage what you need to pay.
- Employment Opportunities: Having a foreclosure on your financial record can also affect your potential employment opportunities. Many companies will issue a credit check as part of a comprehensive background check for potential hires. Some companies may consider a foreclosure as an indicator of poor judgment, reliability, or management skills, and you could lose out on the job opportunity entirely.
- Family Trouble: Losing your home can be a devastating and emotional wound to your family, and it can be difficult to recover from the psychological damage such a situation can bring to them. The emotional impact of being forced to give up your home can even cause long-term emotional trauma. Losing a house can feel like losing a family member, and these strains may result in fractures in your family unit.
Filing for Chapter 7 bankruptcy can sometimes be your only option to avoid foreclosure, but for some families, filing for bankruptcy simply is not an option. Here are some possible alternatives to bankruptcy that may be a better option for your family:
- Don’t Fight It: Sometimes, you may just want to let the foreclosure go through if you don’t want to waste energy trying to fight it. If you don’t want to stay in your home anyway, it can be the easiest option. However, the negative impact it can have on your life may not be worth the trouble.
- Forbearance Agreement: As a result of the COVID-19 pandemic, millions of homeowners are working on forbearance agreements with their lienholders. A forbearance is a temporary suspension of loan payments on your mortgage. It can be a helpful solution if you are suffering some sort of financial hardship, such as a recent job loss or unexpected medical debt.
It can be emotionally overwhelming and financially devastating to deal with the foreclosure of your home in Cleburne, especially if you are doing it without the extensive guidance of an experienced lawyer. Having someone in your corner who understands the complexities of bankruptcy law can make a crucial difference in the outcome of your foreclosure, bolstering your chances of success and stability.
The legal team at Steele Law Firm, PLLC knows how difficult it can be to face a home foreclosure. We can help you figure out what options you may have to keep the house, develop a substantial plan for what to do next, and make sure your interests are consistently protected during this trying time. Contact us to speak with a valued team member and schedule a consultation as soon as you can.
