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Tens of thousands of people are still in the midst of a foreclosure. If a homeowner is going to lose his home to foreclosure then he must what his options are so that he can choose which is the best for him.

So, it is extremely important for a homeowner to consult with an experienced attorney in order to gather all of the information regarding his options. Most homeowners who are facing foreclosure tend to have the same questions regarding what their next step should be.

Q: If I just walk away from my house and leave it, what will happen to me?

A: Most likely you will get a personal deficiency judgment entered against you.

Q: What is a personal deficiency judgment?

A: It is the balance owed on a loan after the home is sold through a foreclosure sale.

Q: Is there a serious and realistic risk of that happening?

A: Yes, because approximately 32% of all homeowners in the Chicago area owe more on their home than it is worth. That is called being “underwater.” If your home is underwater, and if the home is sold through a foreclosure sale, then the proceeds of the sale will not equal what is owed on the loan. This will leave a balance. That balance is called a personal deficiency, and the bank can come after you personally for that.

Q: Can you give me an example of how that works?

A: Let’s say that you borrowed $200,000 to buy a home, but then you fall in to foreclosure. The bank files the foreclosure case and then gets the ability to sell your house. However, since the value of your house is now only $150,000, then when the bank sells your house it only gets $150,000 from the sale. That means there is a balance of $50,000 that is still owed to the bank. That $50,000 is a lot of money to owe, especially if you can avoid have to owe it.

Q: How can I avoid owing a personal deficiency to the bank?

A: First, you should consult an attorney who deals with these types of matters. An experienced attorney can negotiate with the bank in order to get the bank to waive, or forgive, any deficiency that results from the sale of the property. These are complicated matters, and they are best handled by somebody experienced in this area.

Q: Are there other options available to me?

A: Yes, of course. One of the options is called a “cash for keys” option. Which entails the bank actually paying you to leave the property.

Q: How am I able to get that “cash for keys?”

A: Again, first and foremost you should consult with an experienced attorney. If you are able to get that “cash for keys” option, then that attorney will be able to assess this option for you. If that option is available, then your attorney will contact the bank on your behalf and negotiate not only the amount of money you would receive, but also when you would have to move out of the property. Furthermore, your attorney should be able to negotiate what you can remove from the house and what has to stay behind when you leave.

Q: How much will the bank pay me in a “cash for keys” resolution?

A: That all depends on when you are willing to leave, and in what condition you leave the house in. Usually, the sooner you leave the property, then the more money the bank will pay you. These amounts can range from as much as $50,000 to as little as $750. In each instance, the bank is going to want you to leave the house in clean, broom-swept condition. That means, you cannot leave holes in the walls, or the carpet torn up or a toilet removed from the bathroom.

Q: With that “cash for keys” option will the bank waive or forgive the personal deficiency?

A: That is something your attorney will be able to handle for you. Obviously, the most important thing is the waiver of that deficiency because if you have a “cash for keys” payment of $1,500, then that is essentially meaningless if you have a personal deficiency for $50,000. So, you should get a complete and full assessment of your situation from an attorney in order to see if a “cash for keys” option with a waiver of personal deficiency will work for you.

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