When a home goes into foreclosure, the bank is starting a process of reclaiming property that they have a lien on. Generally, foreclosure proceedings start after one or two missed payments and can take up to a year or more to complete. While the foreclosure process is ongoing, a homeowner has a variety of options.
Can I Sell My House During a Foreclosure?
Yes, you can still sell your property during a foreclosure as you still have a legal right to the property and any equity that you have built in it. Many times, homeowners will attempt to negotiate a short sale with the lender. Short sales allow the property owner to sell the home for whatever they can get for it. The bank typically forgives any outstanding balance or is only able to claim a portion of the balance according to state law.
You May Be Able to Get a Stay of the Foreclosure
Although selling the property is an option, it may be possible to stop your lender from moving on a foreclosure proceeding. This may be done by filing for either Chapter 7 or Chapter 13 bankruptcy. During the time of the stay, it may be possible to work out an alternate payment plan. If you file for Chapter 13 bankruptcy, your debt will be reorganized and the stay is in place as long as all payments are made in accordance with the bankruptcy plan.
Know Your Rights Under the Law
You may wish to consult with an attorney prior to taking any action to sell the home during a foreclosure. Ideally, you will work out a payment plan with your lender, short sell it or sell it outright. Before short selling or selling it outright, make sure that there are no clauses in your mortgage preventing you from prepaying early or otherwise prohibiting you from making a deal. With the help of an attorney, it may be possible to delay a foreclosure without the need for bankruptcy while allowing a borrower to sell his or her home.
Can I sell my house? That is probably the biggest question on your mind when you first hear that you are being foreclosed upon. Fortunately, the answer is yes and there may be no penalties for doing so. Therefore, don’t be afraid to put your home on the market instead of leaving your fate in the hands of a bank.