Eight Options to Avoid Foreclosure

Eight Options to Avoid Foreclosure

Last updated: November 2005

Reinstatement

Reinstatement occurs when the loan is brought current by paying the total amount past due.  You have an absolute right to fully reinstate your loan within 90 days of being served with a Complaint to Foreclose Mortgage.   However, lenders will often allow reinstatement as long as it occurs before a foreclosure sale.

Repayment Plan

A repayment plan is designed to reinstate the loan.  It is an agreement to bring the mortgage current over time.  The terms are generally a payment of ½ of the arrearage as a down payment and 1 ½ payments a month until the account is brought current.  A lender will normally not accept a repayment plan after a bankruptcy.

Redemption

Redemption is the act of paying off the delinquent loan in full.  You have the right to payoff the loan during the redemption period which, for residential property, expires 7 months from the date of service of the foreclosure complaint or 3 months from the date the judgment of foreclosure is entered, whichever is later.  The redemption period must expire prior to a foreclosure sale.  Redemption usually occurs either through a sale or a refinance of the property.

Home Sale/Short Payoff

You can sell your home anytime before the foreclosure is finished.  A short payoff occurs when you owe more on the loan than the house is worth.  A lender will usually not accept a short-payoff on a refinance.

Refinance

You may possibly refinance the loan if you have enough equity in your home. However, you will pay a high interest rate plus high loan charges.

Loan Modification

A loan modification refers to changing the terms of the delinquent mortgage.  These changes may include extending the term of the mortgage, adding the delinquency to the mortgage amount or a reduction in the interest rate.

Bankruptcy

Filing bankruptcy will stop the foreclosure case.  A Chapter 13 bankruptcy is a type of forced repayment plan.  A bankruptcy can be filed anytime before a foreclosure sale.  For most people, this should be the last option, not the first!

Deed-in-Lieu of Foreclosure

A deed in lieu of foreclosure is a voluntary transfer of the property to the lender in full satisfaction of the amount owed.  By accepting the deed, the lender releases you from personal liability on the loan.  Lenders will not accept a deed in lieu of foreclosure if there are other liens on the property.

Helpful Organizations
The following organizations may be able to help you with foreclosure

Organizations 1 of 8 |

1.

Prairie State Legal Services, Inc. - Kankakee Office
191 South Chicago Kankakee, IL 60901 | View map

Phone: 815-935-2750
TTY: 815-935-2764
Toll-free: 800-346-2864

Languages: English
View Website

Prairie State Legal Services, Inc. provides free legal services in civil legal matters for low-income persons who have incomes below 125% of the federal poverty guidelines and senior citizens age 60 and older regardless of income.

Eligibility

Whether you are eligible for help from Prairie State Legal Services depends on the following factors:

  • You meet our income and asset guidelines, or are age 60 or older.
  • We have no ethical conflict of interest regarding your legal issue.
  • You live within the service area of Prairie State, or have a civil legal problem in one of the counties in our service area.
  • You meet the citizenship or immigration requirements established by Congress. It should be noted that immigrants who are fleeing domestic violence or trafficking are eligible for legal help regardless of immigration status in matters to address the abuse.
  • Government regulations do not prohibit Prairie State Legal Services from handling your type of legal problem.
  • You have one or more legal problems that can be addressed by PSLS attorneys and that fall within our established priorities.

Types of Legal Help

Due to high demand for our services, our staff is able to provide representation in certain areas of civil law designated as a priority. The following kinds of problems are illustrative of the cases that we may be able to help with (not an exclusive list):

High Priority Cases

  • Family Law: Protection from abuse or exploitation of domestic violence victims, elderly, children and persons w/disabilities; divorce and related relief for domestic violence victims.
  • Housing Law: Evictions and lock-outs; foreclosure defense; loss or denial of subsidized housing benefits; loss or denial of essential public utilities; substandard housing conditions cases that cannot be addressed by other agencies.
  • Health Care: Loss or denial of medical or nursing home care; loss or denial of medical benefits (Medicaid, Medicare).
  • Needs-based government assistance: Loss or denial of SSI, GA, TANF, VA, food stamps.
  • Other income benefits where alternative representation is unavailable: Loss or denial of unemployment insurance, Social Security Title II benefits.

Other Cases We May Handle

  • Family Law: Child support, custody, guardianship, visitation, parental rights, divorces for non-domestic violence victims.
  • Housing: Rent issues; security deposits; unit size; discrimination.
  • Education: admission, expulsion, special education & related services.
  • Health care and people with disabilities: powers of attorney and other health care documents; discrimination and reasonable accommodations.
  • Income or benefits: overpayments of government assistance; health insurance matters; employment issues.
  • Consumer Law: Bankruptcy or other debt relief; consumer fraud; protection of exempt income and assets; unfair debt collection practices; repossession; contract defenses.
     

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