by Edwin Ivanauskas | Tags: Personal Finance, Banking, Loans

You have lived in the same house for twenty years and suddenly with the economy in distress, and you recently laid off or permanently let go, you are now at risk for foreclosure on your home. You see the letter sitting on your table and don't understand what it means. We will go over what this means for you and see what you can do for yourself to protect you.

What is foreclosure?

a Foreclosure is when a creditor files a petition with the court to legally take back a piece of property which is usually your home. When you are late on a mortgage then the creditor has the right to ask the court if they can take it back or foreclose on it. It doesn't matter if you are only a couple of months late. The bank or mortgage company has the right by federal law to do this.

If you have received a foreclosure notice and you can pay the debt then you need to do so immediately. If not you will have a set length of time before the foreclosure will take effect. A sheriff's officer will serve you with a foreclosure document that will let you know that you are going to lose your home on a set date. You can dispute this in court but unless you have an attorney or can prove to the courts that there was an error, you will more than likely lose this battle. A hearing is given along with an eviction notice that you must leave the property or you will be removed for trespassing. If your belongings are still in the house, you will lose those.

Normally, a judicial sale will follow a foreclosure. This is where they will basically auction off the property and all assets that were left behind. If the sale or auction does not bring the amount owed for what your remaining balance was on your home, then you can be taken back to court and forced by lawsuit to pay the remaining balance.

If you receive a foreclosure letter, you can always try to negotiate with your lien holder or bank to try to resolve the foreclosure process. You may also try to refinance your loan through other banks or means before it gets to this point.

By law when you contest the foreclosure, you can try and get a restraining order against the lien holder or the bank so that you can hold on to your house a little longer. This may give you time to argue your case in court with your challenge of the debt not being correct or it can help you to simply buy more time to get a new place to live. Most states have been known to make the bond on the restraining order the same amount of the debt supposedly owed. This stops a lot of people from trying to just get more time within their home.

A Foreclosure is a scary situation for anyone to be in. Please consult an attorney if you receive a foreclosure notice to find out the rights that you may have.

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