Steps after foreclosing on a property

Asked over 3 years ago - Chicago, IL

I have a vacant condo in illinois, that currently is behind in payments, I am attempting a short sale. In the event that the short-sale does not work, and foreclosure occurs, and the lender seeks a deficiency judgement what are my options? My concerns are
401K
cars
other owned realestate
personal property owned jointly with a spouse (spouse was not on the mortgage of above property)

Attorney answers (3)

  1. Sandra Margaret Emerson

    Pro

    Contributor Level 11

    1

    Lawyer agrees

    Answered . I agree with the previous two posters. One more thing that you should know is that even where the lender doesn't seek a deficiency judgment, the fact that there is a potential deficiency out there can negatively affect your credit. Depending on your situation, you may also wish to consider a Chapter 7 if the bank forecloses. As the other posters noted, your 401k would be exempt. And you can potentially keep your other property, both real and personal, if the property is exempt by statute or has no potential to pay creditors if sold. (For example, you may own a couple of investment properties that are underwater or have very little equity.)

    This answer is not intended to create an attorney-client relationship.

  2. Alan James Brinkmeier

    Contributor Level 20

    Answered . 401(k) account is safe.

  3. Jeffrey Scott Marks

    Pro

    Contributor Level 7

    Answered . In most circumstances, under both Illinois and Federal law, creditors cannot touch a 401(k) account. One of the biggest mistakes I often see debtors making is reaching into their protected 401(k) accounts to settle debts. All of your other items may be fair game subject to certain exemptions under Illinois law.

    The good news is that at least in Cook County, very few lenders are seeking deficiency judgments after a foreclosure. It may even be worth your time to contact the bank and see if they would be willing to take your deed in lieu of foreclosure and release you from any deficiency. Based upon the appraised value of your house and the amount of your mortgage, they may accept a deal now to cut their losses.

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