The first thing a business owner should do when faced with foreclosure is to understand their financial situation. Seeking advice from professionals and consultants can help the owner strategies programs and explore other options that may be available.
Communicate with your lender the moment you are delinquent in your mortgage payments. Trying to avoid them will not help you stop foreclosures. Discuss possible restructuring terms with your lenders. Banks and lenders do not want foreclosures on their hands as much as owners do not want to lose their businesses. They may be willing to change repayment terms, grant you loan forbearance or lower your interest rates. However, the first step will depend on you and your effort to get in touch with your lender.
Find ways to raise money to pay what you owe the bank. You could try to get a second loan to pay off your delinquencies; however, the current market may not allow you to do so. Use personal money or borrow from friends and family just to stop foreclosure.
Consider selling your business in a bid to stop foreclosure. It may not be your whole business but even just part of your assets or real estate, just enough to pay for your delinquencies. Banks will agree to stop proceedings if you can show them that you can pay them what you owe.
Filing for Chapter 11 bankruptcy-court protection may be an option to stop proceedings on foreclosures. However, this would be a lengthy and costly path to take. But, it can give you some time to get your act together such as develop a new business plan or find ways to recover your business. This can also protect you from greater risks should you decide to guarantee your loan with personal assets.
Leticia Carvalho has been educated in the finer points of the foreclosure market over 5 years.
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