When a homeowner cannot afford to make his or her mortgage payments, the home may go into foreclosure. In short, this means the homeowner's mortgage lender takes possession of the home. However, this is not an instant process. The foreclosure process can take close to a year to complete in Illinois and early in the process, a homeowner can reverse the process and keep his or her home.

Foreclosure is often discussed in conjunction with bankruptcy. Both are legal proceedings that can affect individuals facing financial hardship. Below are three ways a homeowner can avoid the foreclosure process and keep his or her home. In Illinois, all foreclosures are judicial foreclosures, which means that the lenders involves the court to complete the foreclosure process.

Modify your Mortgage Loan

Evaluating the legality of your home loan documents is a critical first step in the foreclosure process. During the housing boom, many mortgage lenders cut corners and failed to properly comply with securities laws in their pursuit of maximizing profits during the boom. If you have received a notice of foreclosure, your loan documents should be reviewed and evaluated for legitimacy by legal counsel as soon as possible.

Lenders And Banks Originated Invalid Documents

Many lenders were doing so much business, so quickly, that what resulted were work process failures that caused invalid loan documents to be originated and issued to consumers and other lenders. Potential cases of lender misconduct include robo-signing, predatory lending, inaccurate documentation and defective transfers.

For many homeowners, a loan modification request is much like a ride on a Ferris wheel. The lender offers assistance through HAMP or some other federal program, raising hopes and expectations. Then, the bank suddenly withdraws its offer, many times based on technical grounds, such as turning in documents a day or two late, a Debt To Income ration that is a few points too low or a Loan To Value ratio that is a few points too high. This rejection is followed swiftly by another assistance offer, and the wheel starts moving again.

All this time, the bank is generally not accepting partial payments, so the delinquency keeps getting higher and higher. Eventually, the Ferris wheel stops. The lender soberly declares that the delinquent amount is too high to be repaid. Foreclosure follows.

Chapter 13 Bankruptcy may offer distressed homeowners a way to get off the Ferris wheel and get on the tram that takes you where you want to go.

The bankruptcy filing rate is at its lowest point in seven years for most everywhere in the country, except for the Land of Lincoln and a few other states.

November 2014 filings were down 16 percent, when compared to November 2013. Much of the decrease was due to a much lower commercial bankruptcy filing volume. These new filings were down 27 percent. One observer pointed to a combination of high filing costs, low consumer spending and low interest rates as being primarily responsible for the decline.

Illinois, however, had the fifth-highest per capita bankruptcy filing rate in the country. Its 4.72 filings per 1,000 people was eclipsed only by Tennessee (6.22), Alabama (5.34), Georgia (5.30) and Utah (4.93).

In 2008, the U.S. real estate market witnessed a devastating turn of events as the market erupted in a resounding collapse leading toward record-breaking foreclosures and the lowering of market value pricing across the U.S.

At the time, Dean Baker, co-director for the Center for Economic and Policy Research, based in Washington, D.C., laid blame on a lengthy list of “villains” responsible for the housing crisis as homeowners opted for foreclosure or watched as their equity holdings deeply plummeted.

Baker advised lenders that perhaps the best way to prevent any future bubble was to prevent the bubble from forming in the first place.