Real Estate Definition: Illinois is a Judicial Foreclosure State
Richard Fonfrias, J.D.
Chicago's Financial Rescue & Bankruptcy Lawyer
Fonfrias Law Group, LLC
In Illinois, if a lender wants to take your property after you default on your mortgage, the lender must file a foreclosure lawsuit. This is a long and costly process. And if the lender wins the lawsuit, then you are often liable for the deficiency. This is the difference between the amount that you owed on the mortgage and the amount the lender got paid when the property was sold.
For example, if you owed the bank $300,000 and the court-ordered sale brought only $210,000, then you could owe the bank the deficiency, which is $90,000.
If you want to avoid the long court process and the risk of a deficiency judgment, you might ask your lawyer if he could negotiate with the lender to end the lawsuit and enter into a consent foreclosure. This allows you to walk away from your home without owing the lender any deficiency. In short, you give the bank the property and you pay nothing to the bank.
In many cases, this allows you to avoid a deficiency judgment and a bankruptcy. And banks like this because they avoid all the time and expense of a foreclosure.
The only possible negative is that there might be tax consequences from the debt you no longer have to pay. While uncertainty exists about the tax implications, it may be well worth paying the taxes to avoid the possible deficiency of many thousands of dollars in debt. Best to consult with an Illinois financial rescue lawyer to discuss the potential tax implications and how paying them may be your best course of action.