Foreclosure laws and procedures in arkansas

“Foreclosure” is a scary term for homeowners. It represents the loss of safety and security that comes along with losing your home, and it can have devastating and disastrous results. If you’re a homeowner, it’s imperative to be familiar with foreclosure laws and procedures in Arkansas– so you can avoid losing the home you’ve worked so hard for, and the stability it provides you and your family.

 

What exactly is foreclosure?

 

When most people purchase a home, they aren’t able to pay the entire cost of the home upfront in cash. That’s why people apply for mortgage loans, allowing them to pay their lender back for the home over a predetermined length of time.

Foreclosure happens when the homeowner isn’t able to make the agreed-upon payments. The lender then has the option to seize the home and sell it in order to avoid losing profit on the loan. Usually, this process happens when the homeowner has missed a certain number of payments.

 

Why does foreclosure happen?

Mortgage lenders make money off of their loans; the process must be profitable to them to be worth it. Therefore, when a borrower isn’t making the agreed-upon payments, the lender isn’t making money off of the agreement anymore, and must take action.

Essentially, in the terms of the mortgage loan, the borrower agrees that the home or property in question can be used as collateral in the event that the borrower doesn’t make payments in a correct or timely manner.

 

How do foreclosures work in Arkansas?

There are two types of foreclosure procedures in the state of Arkansas.

Judicial Foreclosure

The first is called a judicial foreclosure. In a judicial foreclosure, a lawsuit is filed by the mortgage lender with the goal of selling the foreclosed home or property. If your mortgage lender is proceeding with a judicial foreclosure, it’s highly recommended that you seek legal counsel.

Legal counsel will be of great benefit to you in a judicial foreclosure because you’re required to follow certain steps in order to work toward a result that’s beneficial to you, the borrower. In this type of foreclosure, the borrower must respond with a written reply– and if you don’t, the lender automatically wins the lawsuit. 

An experienced attorney can help you navigate the specific legal proceedings you’ll have to deal with, ensuring that you don’t miss anything. 

Nonjudicial Foreclosure

The second type of foreclosure in the state of Arkansas is called a nonjudicial foreclosure. This is the most common type of foreclosure proceeding, because it’s generally quicker than a judicial foreclosure and can be less expensive for everyone involved.

A nonjudicial foreclosure is one that’s settled out of court according to procedures outlined by state statutes and in the original mortgage loan agreement. 

If a lender intends to proceed with the foreclosure process, they’re required to send the borrower specific documents, like a copy of the original mortgage agreement and information about financial assistance, like forbearance or a modification of the loan’s terms.

What can I do if I’m facing foreclosure?

Thankfully, there are few different avenues you can take to avoid losing your family’s home. In the state of Arkansas, you can reinstate the mortgage loan, which means catching up on all of your missed payments at once. This will probably include extra fees incurred by late payment.

You also have the option to file for bankruptcy. This is an option that can immediately stop the process of foreclosure, and while it comes with its own set of complications, this is a potential way to save your home.

 

To determine what type of bankruptcy would be best for your situation, and for assistance with legal proceedings surrounding foreclosure in general, we’d highly recommend seeking legal counsel with an experienced, knowledgeable attorney who’s willing to fight for your security and stability.

If you’re facing foreclosure or considering filing for bankruptcy to halt a foreclosure, get in touch with us today– send us a message, give us a call, or stop by our Little Rock office. We’re here to help.

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