Foreclosures

Foreclosure can be defined as the process through which a lender can recover interest and principal amount due from a borrower through the sale of the asset that was used as collateral for the loan. This may be a vehicle, a piece of land, house, shares or any other asset. The borrower must have missed at least three instalments before the foreclosure process begins but with the help of accountants in Bromley, you can avoid the process altogether.

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The foreclosure process

Foreclosure can either be judicial or nonjudicial depending on the state. The former refers to a foreclosure where the lender must initiate the process through the court while in the later, the lender is not obligated to take the matter to any court. Once the borrower has missed at least three instalments, usually over a period of 90 days, and has not made any effort to restructure the loan or inform the lender, the lender will make a public record of the default and send a notice of default to the borrower.


Pre-foreclosure

When the borrower receives the notice of default, he or she has a grace period of ninety days to rectify the situation. This could be through restructuring the loan, selling the asset involved and paying off the loan, borrowing from other sources to repay the debt or any other means. Failure to do this leads to the auction stage.


Auction

Upon the expiry of the ninety days, the lender or his or her trustee sets the date on which the property or asset used as collateral will be auctioned in what is referred to as the Trustee Sale. This sale must be recorded with the state or county, published in the local dailies, a copy should be delivered to the borrower and another posted on the door of the home/building in cases where the house was the collateral. The house is then sold to the highest bidder and the lender recoups his or her money


Who can help you avoid foreclosure?

One of the ways that you can avoid foreclosure as a borrower is proper financial planning. Accountants in Bromley can assist you in financial planning to suit your needs. They can help you track your expenses, minimise on unnecessary expenditure and channel this money to priority expenses such as repaying your debts. Financial planning is also good as it helps you in identifying other possible sources of income. If you are experiencing financial problems, and foresee inability to service all your debts, it is prudent to consult an accountant to avoid foreclosure.


Parties involved in a foreclosure

The fundamental parties are the lender and the borrower. However, there are other people and institutions that may be involved in the process. In cases of judicial foreclosures, the process will involve attorneys and the courts. The state will be involved since notices must be file before the auction can take place.


Foreclosures can lead to bot emotional and financial turmoil. While understanding the process and what reprieves you may have will be of benefit, it is essential that you take all measures to avoid foreclosure.