Defending Against Judicial Foreclosure
 

In a judicial foreclosure, the lender files a lawsuit in state court. You will receive a foreclosure complaint, petition, or similar document, along with a summons. The summons will notify you about your rights and state how many days you have to formally respond in writing (called the answer) to the complaint, usually 20 or 30 days.


 

What goes in the answer. An answer, which you must file with the court and serve to the foreclosing party, should include:

 a response to each numbered paragraph in the complaint stating whether you admit, deny, or don’t have sufficient information to respond (and therefore deny) the allegations in the paragraph (if you admit an allegation, the lender does not have to provide proof of that allegation) your defenses (for example, you’re not actually behind in payments) or affirmative defenses (why the court shouldn’t let the lender foreclose), and    any counterclaims (your claims that the lender has violated other laws).


If you've lost work because of the coronavirus outbreak and fall behind on loan payments, loan modification could help you avoid default.



 

Loan modifications are most common for secured loans, such as mortgages, but you may also be able to modify other types of loans. That could include personal loans or student loans.
 

A loan modification can relieve some of the financial pressure you feel by lowering your monthly payments and stopping collection activity.
 

But loan modifications are not foolproof. They could increase the cost of your loan and add derogatory remarks to your credit report.
 

That doesn't mean you should avoid a loan modification. But before you jump at the chance, consider all the angles.

 

Do Loan Modifications Affect Your Credit?
 

If you're thinking about a loan modification, chances are your credit has already taken a hit. "Most customers in the process are already delinquent," Broeker says.
 

When you proceed with a loan modification, a comment code will appear on your credit report that says something like "paying by modified terms."
 

But getting back on track with payments could have enough of a positive effect on your credit over time to make up for this derogatory remark.
 

If you're still unsure whether a loan modification is a good idea and hesitate to extend your loan term, remember that you can refinance later, when you're on better financial footing.
 

"I don't think loan modification fits everybody," Broeker says, "but it's the single best tool we have from a loss mitigation perspective to keep people in their homes."