Non-Bankruptcy Foreclosure Avoidance Options in Chicago
Bankruptcy is usually the best way for distressed homeowners to avoid foreclosure. The Automatic Stay halts foreclosure proceedings and most other creditor adverse actions. Furthermore, bankruptcy gives distressed homeowners up to five years to catch up on delinquent payments. However, although the mortgage delinquency rate is at an all-time high, bankruptcy isn’t for everyone.
If a homeowner doesn’t qualify for bankruptcy, doesn’t want to file for personal reasons, or this process otherwise is not an option, a Chicago bankruptcy lawyer is still available to help. Numerous other options are also available. Many of these options are almost as good as bankruptcy, at least in some cases. Only a qualified attorney evaluates a situation and identifies all legal options, bankruptcy or non-bankruptcy.
Temporary Restraining Order
In some cases, a judge may issue a TRO that stops foreclosure proceedings. Usually, a judge takes this action if a homeowner makes a prima facie case of fraud or a violation of the National Mortgage Settlement agreement.
Mortgage fraud was rampant in the early 2000s. Many mortgage companies convinced people to sign documents they barely understood and buy homes they could barely afford. Additionally, many mortgage companies made false promises, such as the possibility of easy refinancing, to seal the deal.
Dual tracking (initiating foreclosure proceedings while simultaneously offering a loan modification or other relief) may be the most common NMS violation. Others include notice issues, improper mortgage transfers, illegal fees, failure to provide a single point of contact (SPOC), robo-signing, and document runaround (failure to properly review loan modification applications).
If the judge hits the pause button, a Chicago bankruptcy lawyer has a chance to renegotiate better financial terms and get homeowners back on track.
Statute of Limitations
An SOL argument is often part of a TRO application. The statute of limitations, which is normally two years in contract cases, is often an issue in multiple foreclosure matters.
Assume Jack and Jill fell behind on their mortgage payments in 2022. The bank sent them an acceleration notice and opportunity to cure letter. Jack and Jill caught up on their mortgage payments, but the bank didn’t rescind the acceleration notice.
In 2025, Jack and Jill fell behind again, and the bank once again threatened foreclosure. That threat may be an empty threat, because the initial acceleration notice was more than two years old. If the SOL expired, the bank may be unable to foreclose on the loan under any circumstances.
Non-Legal Options
If these options are unavailable for whatever reason, a Chicago bankruptcy lawyer can help distressed homeowners with short sales, deeds in lieu of foreclosure, or cash for keys programs.
A short sale is a property sale for less than the fair market value. The bank agrees to eat the difference between the sale proceeds and the home’s fair market value. A deed in lieu of foreclosure is basically a voluntary foreclosure. A DIL looks better on credit reports than a foreclosure.
Cash for keys is the absolute last-ditch option in most cases. The bank may pay homeowners a few thousand dollars to clean out their houses, make them ready for resale, and leave them in good order.
Count on a Savvy Cook County Lawyer
No matter what kind of financial problem you are having, there’s a way out. For a free consultation with an experienced debt reduction attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. After-hours and home visits are available.
