There are already many people who lost their homes because of their debts, and this absolutely is the heaviest consequence of all. Losing a home has a great impact on one’s life. It can bring depression and public humiliation, and another sad thing is that the problem may not end there. Being able to sell your home doesn’t necessarily mean that you will already be able to pay off all your debts. There are some that lose their home and still remain indebted.
This is a very depressing situation, but the good news is that this seldom happens. Foreclosure of property is actually the very last possible option of few creditors. Debts, such as credit cards or bank loans fall under unsecured loans, and this means that your valuable properties are never considered as collateral, therefore, leaving them safe in your possession.
Foreclosure of property can only be applied on secured loans and on debts owed to the government like unpaid taxes, but then again, this rarely happens. You will likely lose your home if your are unable to update your, let’s say, mortgages or other property loans.
Lending institutions strictly implement foreclosure, but this option is not, in any way, so desired by creditors for they will not profit much from it, and that they do not want to be known as a company with no heart. Foreclosing a property is a long process. You usually need to have at least 6 months of unpaid instalments before you are given a foreclosure notice. The 6-month period is enough time to make you decide to either avail of remortgage or debt consolidation. This, likewise, is enough time to negotiate with the lending institution regarding debt restructuring.
There are certain steps that need to be followed in the foreclosure of property, and here they are:
1. You will be given a notification letter stating that you have an overdue account. You will also be asked to contact them and discuss possible ways on how you can repay them.
2. In case you have ignored the first letter or if you did not abide by the revised terms, you will again receive a letter that will serve as a warning.
3. If you still fail to settle your overdue accounts or at least negotiate with the lending institution, a final letter, which is known as the solicitor’s letter, will be delivered to you. This letter states that you need to settle you account or come up with an agreeable proposition on how can repay your debt.
4. If, again, you fail to reply to the final letter, your case will then be brought to court. The court will then give lending institution the right to foreclose your property. However, the court will still try its best to resolve the case through a reasonable agreement. This is true if there are children who will be affected by the foreclosure.