Fearing Foreclosure - Walking Away May Cost You More Then You May Know

Many people that are facing foreclosures are frustrated and upset about the current situation. Even though this may be the case many believe that walking away from their homes and letting them go into foreclosure is the answer; however this is not the proper way to handle this situation
I would encourage people to deal with situations so that they are not evicted from their homes at the worst possible time. Often time's lenders do not go away after the home is foreclosed and sold to the next buyer or investor. The lenders can make life hard for several years to come.
I will go over several scenarios of when this can happen to you, or someone that you may know of in this situation.
The first thing that you have to understand is if the home has two mortgages this can lead to problems when the house is foreclosed and the bank takes it bank. The first lien holder, otherwise known as the first mortgage may bring forth the eviction. After the home is foreclosed and sold at auction, the second mortgage that was on the home is wiped out.
The law generally is that the second mortgage can sue you for breach of contract and come after you directly. More then likely they will get a quick judgment in a court; and now this can force you into a bankruptcy situation.
However, even this is not save you in most cases, as the judgment against you will have to be repaid over the course of 3-5 years. Many people are not able to qualify for a Chapter 7 discharge due to the new laws regarding bankruptcy, so you will have to file Chapter 13, which requires you to repay the debts, under the supervision of the court system
Some may be able to qualify for Chapter 7, however your income will have to be below the median income of the state and your debt has to be signing as outlined by each state and individual laws.
The second scenario is that the first lien holder can come after you directly as well. In this case you will not only have a judgment for the balance that was owed on the second, but you will have a judgment for the balance of the loss incurred by the first mortgage company. Not all states fall into the scenario, so make sure to investigate your particular situation with an attorney that knows and understands foreclosure laws in your state.
In any case, where there is a judgment against you can be asked to go to a hearing whereby you will be required to provide financial documents, bank account information and a detailed list of all valuables that you own. Which would include just about anything that you have that has some value, even as little as it may seem.
To avoid foreclosure and the repercussion of such, your best course of action is to perform what is referred to as a "short sale". This is done by negotiating with the lenders. Finding help is also a great way to avoid potential issues down the road. So contact an attorney, real estate agent or anyone that you trust has the expertise and knowledge to help you out in your situation.
However, most people do not realize this and think that "walking away" is the best solution. Do not do this, please talk to an attorney or real estate agent before just walking away, as it may cost you more then you think in the end.
Thomas Bladecki is the author and can provide additional information about how to avoid foreclosure, and what to do in the event you are (or someone you know) is facing foreclosure. Home Foreclosure Help has valuable information about avoiding foreclosure.
Article Source: http://EzineArticles.com/?expert=Thomas_Bladecki