Sometimes things go wrong and the reality is not exactly as we had imagined. This occurs in cases in which, for whatever reasons, a person is unable to cope with the debts contracted and, consequently, creditors decide to take action against the debtor's personal assets and initiate a procedure of foreclosure.
Index of contents
What is a foreclosure proceeding?
A foreclosure procedure is a judicial procedure that occurs when a creditor, unable to collect the debts contracted by his debtor, files a lawsuit in order to execute his assets and thus be able to collect the amount owed.
Normally these types of procedures are carried out as a result of the non-payment of three consecutive bills in cases of mortgage loans, although it does not have to be the case. Cases of defaults on personal loans or even in criminal proceedings for certain crimes can also end in this way , in order to face the debts or the judicially required compensation.
In the event that the court rules in favor of the creditor in the legal proceeding, the property in question will be evicted and put up for public auction to be awarded by a buyer and thus the debt can be settled.
Solutions against a mortgage procedure
As in all aspects of life, there are solutions to this problem. In these cases, it is vital to act quickly, before the procedure reaches very advanced stages.
You have to be aware that finding yourself in foreclosure is a very delicate situation and that, therefore and especially in the most difficult cases, you will have to choose the least bad of several alternatives.
Obviously, the solution that is chosen, always in order to avoid the loss of the property in question, will be determined by two key factors: 1. the amount to which the debt amounts and 2. the ability to repay. of this debt
Refinancing vs. Foreclosure
As the word itself indicates, refinancing a debt means refinancing it, that is, acquiring a loan to be able to settle the debt that is being executed in court and, in this way, save the property, facing the return of the same with fees.
Now, you have to be extremely careful about choosing this path because, if done wrong, it can pose an even bigger problem for the debtor. The way of refinancing will only be advisable and viable if the person requesting it currently has a secure and stable source of income over time, which was not previously available, and which will allow you to return ... Click to Tweet On otherwise, it will be bread for today and hunger for tomorrow, as the saying goes.
For example, imagine the case of a person who was unemployed 4 years ago and used up all kinds of benefits. Let's imagine that this person had taken out a mortgage loan with any bank from which they bought their own home that acts as collateral. Due to his personal situation, at one point, this person was not able to meet the installments and therefore the bank initiated the foreclosure procedure.
Let's imagine that in the course of the procedure, this person managed to find a job and that, luckily, this job brings him enough income to face a periodic fee and be able to comfortably pay a debt that would not be possible otherwise.
On more than one occasion we have managed to deal with this type of situation by offering an adequate solution in cases where it was convenient for the client.
Selling vs. Foreclosure
However, if the situation is not as clear as the example above, refinancing is not a viable or beneficial option for the customer.
In those cases, the only feasible option is to sell the property. Here two scenarios open :
- That we sell the property to an individual with what the price for which we will sell it will be a market price. However, we must be aware that this option is not advisable when a foreclosure process is open since in these types of operations time is short and we may find ourselves in the case in which when we want to sell the home the loan is already auctioned have made.
- The most advisable option in this case is to sell the home to an investor. This has the advantage of speed, we will be able to sell the house quickly, we will pay off the debt and we will obtain a differential with which to start over; and it has the disadvantage, we must be aware of it, that the price that they will offer us will be slightly lower than the market price since, as investors, they need to obtain a sufficient commercial margin to justify entering the operation.
In any case, if you find yourself in a situation similar to this, do not hesitate to contact us and request a free study without obligation to find out which is the best alternative in your case.