Have you missed a few mortgage payments because of COVID-19 or for any other reason? If so, you might be inching ever closer to defaulting on your loan, which means that foreclosure could soon become a possibility. While many lenders—including most federally sponsored lending programs—put a moratorium on foreclosures during the COVID-19 health crisis, these moratoriums will soon be coming to an end. With this in mind, you will need to address any payments that you might have skipped, regardless of the reasons.

The good news is that you will almost certainly have options that can help you get your loan back in good standing so that you can keep your home. One of the most common of these options is a loan modification, and an experienced Libertyville attorney can help you with your application.

Be Proactive

Put simply, a loan modification is an amendment to the conditions and terms set in your mortgage loan agreement. The purpose of the modification is to allow you to catch up and bring your mortgage current. Loan modifications can take many forms. For example, you might qualify for a loan extension that reduces your monthly payment, an adjustment to your interest rate, or an approved capitalization of the payments you have missed. The different types of loan modifications all share at least one commonality: a modification will not be granted unless you ask for one.

Are you substantially behind on your bills and so far in debt that you are considering bankruptcy? Is a large portion of your debt money that you owe to the IRS in back taxes? If you answered “yes” to both of these questions, you probably have a question of your own: Will bankruptcy help with my tax debt anyway?

Under the United States Bankruptcy code, not all debts can be discharged by filing for bankruptcy. Some debts, such as student loan obligations, will remain your responsibility even if your bankruptcy is successful in wiping out most of your other debt. Tax debt, in most cases, can be discharged, but very specific criteria apply.

Discharging Tax Debt in Chapter 7

For the purposes of this discussion, we will focus on Chapter 7 bankruptcy, sometimes called “straight bankruptcy.” Under Chapter 7, you, as the filer, agree to turn over your assets (with certain exceptions) to the bankruptcy trustee. The trustee will liquidate your assets and use the proceeds to pay off your debts. Remaining debts are discharged, presuming that they are eligible for discharge.

As the Chicago region begins to emerge from the lockdown caused by the COVID-19 pandemic, the housing market is flooded with prospective buyers looking to get a great deal on their next home. If you are searching for a new house, family members and friends may have suggested the possibility of buying a foreclosure property. A foreclosure property is real estate—in this case, a home—that is for sale by a lender because the current owner defaulted on the mortgage. Most defaults and foreclosures are caused by a failure to make the required payments.

A foreclosure sale is usually an auction, which means that it is possible to score a great deal, depending on the condition of the property. If a foreclosure property is put up for auction but not sold, the property reverts back to the bank and becomes a “real-estate owned” or REO property.

In March of this year, the U.S. Department of Housing and Urban Development (HUD) issued a moratorium on foreclosures for all single-family mortgages insured by the Federal Housing Administration (FHA). The moratorium was in response to the anticipated financial effects of the COVID-19 pandemic on households across the country. The move was shortly followed by a similar directive from the Federal Housing Financial Agency (FHFA), which ordered the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Company (Freddie Mac) to suspend foreclosures for at least 60 days.

Shortly thereafter, federal lawmakers passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide financial assistance to millions of American families. In the months that followed, the foreclosure moratoriums were extended several times. Though they are set to end on August 31, 2020, in Chicago, Gov. Pritzker has extended the moratorium to last an additional 30 days. However, the financial assistance offered by the CARES Act already expired earlier this month, leaving many Illinois residents wondering if there is any other help available.

Lake County Offers Renters’ Assistance

For those who rent their homes, several agencies in Lake County have established programs to provide assistance with rent, food, and utility bills. Community Partners for Affordable Housing and other groups say that their programs are open to county residents who have been financially affected by the pandemic. Those who have lost their job, have reduced income, or unexpected expenses related to COVID-19 are allowed to apply, though income and savings limits could affect an applicant’s eligibility for aid. For those who are approved for rent assistance, the funds are paid to their landlords directly.

Even if you have never owned your own home before and do not have a track record of missed payments, the failure to make mortgage payments will eventually lead your lender to file for foreclosure. Foreclosure is the legal process through which a lender can seize a home from a borrower who has failed to live up to his or her obligations set forth by the mortgage agreement. While there are other violations that could lead to foreclosure, the overwhelming majority of foreclosure filings are prompted by the borrower failing to make payments.

The foreclosure process can be intimidating and extremely challenging for the average homeowner. It is very easy to make mistakes under such confusing circumstances, and a single error could end up costing you thousands of dollars. If you are behind on your mortgage, and foreclosure is looming, be sure to avoid these common mistakes that many homeowners make.

Mistake 1: Avoiding Your Lender

According to Illinois law, a mortgage lender must wait until you are 120 days or more delinquent on your mortgage to initiate foreclosure proceedings. However, the lender will most likely begin calling you and sending letters as soon as you miss a payment. Communication will probably increase as you get closer to being in default. While it may be uncomfortable to do so, you need to pick up the phone and talk with your lender. Doing nothing is not in your best interest. In most cases, your lender will have programs available that could allow you to work things out and avoid foreclosure altogether.