Foreclosure. For many homeowners in Kentucky, it’s a dirty word that you dare not speak. It’s also the kind of situation many people think will never happen to them…until it becomes very possible, very fast. As recent events have shown, things can change in a hurry in the current climate. The financial markets take a sudden downturn or you lose your job. Then you fall behind on your mortgage payments and scramble to keep up. Then, before you know it, your lender is contacting you about payment and then you’re in pre-foreclosure soon after. By the time your Louisville house ends up in foreclosure, it can feel as though you’re out of options, especially if lenders are being aggressive in how they demand payment for the mortgage loan.
However, there are ways to stop or prevent foreclosure proceedings, many of which allow you to maintain autonomy and control over what happens to your Louisville house. Whether you file for bankruptcy, apply for a loan modification, use the legal system, or sell your house, you have a lot of options. And if you consider selling your Louisville house to avoid foreclosure, you’ve got lots of options, from selling the house on the open market or selling it as-is for cash to a real estate investor. Let’s take a closer look at how you can avoid house foreclosure in Louisville by selling.
Avoid House Foreclosure In Louisville By Selling
What is Foreclosure?
Before we discuss how to avoid foreclosure in Louisville, we want to make sure you understand what foreclosure is and how it works. Foreclosure is the process that begins when a loan borrower fails to or is unable to pay their mortgage payments. The lender or investor will then begin the process of repossessing the house or property. Foreclosure can also happen if the homeowner or borrower is unable to pay property taxes or their homeowners association (HOA) fees.
During the foreclosure process, the mortgage lender can take ownership of the property from the borrower and sell it in order to make up the money they did not receive from the loan. The lender has the legal right to take back the house because a mortgage is a secured loan. That’s important to remember because it means the borrower has guaranteed repayment of the loan by providing collateral of some kind.
Ideally, the borrower provides money to repay the loan in the form of monthly payments. But in the situation where they are unable to make payments, the house becomes collateral. And when a borrower signs an agreement to take out a mortgage, you agree to the understanding that they can foreclose on the house if you default on the loan. This can often be known as putting a lien on the title of the house. But if the borrower pays off the entire mortgage loan, the lien on the title is taken away.
This is often not an issue because when people qualify for their mortgage they are normally in a position to make their mortgage payments. This is because the lender verifies income, credit scores, and the borrower’s debt-to-income ratio. However, as we all know, life can throw some curveballs our way. Whether because of the economy, life changes, or other factors, people can suddenly find themselves without the ability to repay their mortgage. And it only takes a few months of not repaying your loan for a homeowner to find themselves in trouble and facing foreclosure on their Louisville home.
Foreclosure Process in Kentucky
When payments on a home mortgage are officially 60 days overdue, a mortgage lender will usually either stop accepting payments or will need the borrower to work out a repayment deal with them. That will also begin the foreclosure process. Kentucky is a judicial foreclosure state, which means that a lawsuit needs to be filed by any corporate in order for them to foreclose on the mortgage.
It typically takes around six months for a homeowner to be served with foreclosure. The borrower will be served with the foreclosure notice legally. Once they are served, the homeowner has 20 days to file their answer with a court. The homeowner can sue the mortgage company back but if they choose not to fight, a default judgment will be issues and foreclosure will continue.
It can take as few as 90 days for a mortgage lender to foreclose on a Louisville house and evict the homeowner. However, if the homeowner answers the complaint, that can delay the process. By filing an answer, you can often delay eviction by as much as six months. If there is no answer, the default judgment will be filed in 30 days. There are other ways for the process to be delayed as well.
If the foreclosure proceeds and the mortgage lender sells the house, it may not get back all of the money owed to repay the mortgage balance. If that happens, they will issue a 1099 and inform the IRS that the homeowner now has an income tax liability. The lender can also sue the homeowner to try and collect the balance from the homeowner. This is where the borrower can file bankruptcy in order to protect themselves, although that comes with its own issues and concerns.
How To Avoid Foreclosure
One way to avoid foreclosure in Kentucky is to declare bankruptcy. This stops any foreclosure process regardless of timelines. This at least gives you more time to figure out your plan. It’s possible that the lender will file a motion for relief during this stay, which the court may or may not grant. But even if they do, it will at least delay things for a month.
Declaring bankruptcy might sound like a good solution, there are drawbacks you should be aware of. In declaring bankruptcy, your credit score will get hit, which makes it hard to get loans or credit in the future. You also can’t file bankruptcy again for a long time, so you only want to use it when it’s absolutely needed. Bankruptcy will let creditors attempt different collection actions against you, including wage garnishment, so it doesn’t mean you’re free from repayment.
Another option is to find a way to work with your lender. You can apply for a loan modification or foreclosure avoidance process that the lender would be happy with. This can slow things down and help you avoid the pitfalls of declaring bankruptcy.
Can You Sell a House in Foreclosure?
If you’re up against it, the clock is ticking, and you find yourself out of options as you attempt to avoid foreclosure on your Louisville house, one of the best options is to sell your house as-is to a real estate investor like Time Worthy Property Solutions. Even if it looks like foreclosure is close to happening, until the lender actually owns your Louisville house, we can make you a cash offer and work with you to avoid foreclosure in the process.
The best part of working with Time Worthy Property Solutions is that you don’t need to do anything to the property first. We buy houses “as-is,” which means we buy houses in any condition, whether that’s physical damage or financial problems. No need to make repairs, clean up, or do any kind of staging.
Just reach out to us with all the details about your house in foreclosure in Louisville, Kentucky and we’ll take it from there. We’ll assess the property and then make you a fair, no-obligation offer. If you decide to accept the offer, we will pay you cash for the house. Also, if you approve, you set the timing of the closing, either right away or in a few months so you can sort things out first. You don’t have to make any repairs or worry about sorting out the financial situation any further. Walk away from the foreclosure process and put cash in your hands so you can start fresh.