Commercial foreclosure occurs when a property owner fails to maintain his or her mortgage loan or other liens on the property securing these loans. The creditor may file foreclosure against such a business owner or the business itself if these payments become significantly behind and no action is taken to rectify the situation. Individuals facing commercial foreclosure should consult with an attorney as soon as receiving any notification of foreclosure from the creditor's attorneys.
Working To Stay In The Property
If the business owner wishes to stop the commercial foreclosure process, the business owner may accomplish this through several steps.
- Work with the lender to get the debt on track. This may include using modifications of the loan or making payment in full for any past due debts.
- Obtain a new loan. By refinancing the old loan, the old loan is paid in full. Individuals who are significantly behind on mortgage debt may find this difficult to do since lenders may be unwilling to take on the new loan.
- The business can file bankruptcy, which will stop the foreclosure process. The bankruptcy court and the debtor will then determine if the property should be seized by the creditor or if a repayment plan can be renegotiated for the borrower.
In some situations, avoiding the commercial foreclosure is possible. In situations where the business is profitable and can continue to make payments if caught up, this is the route to take.
Working To Let Property Go
Commercial foreclosure may present an opportunity for the business owner to let go of a potentially unprofitable operating location. If the property is not profitable and the business owner wishes to shutter the business's doors at that location, allowing the commercial foreclosure process to proceed may be a good option.
- Is the business operational at the location?
- Is the property loan upside down, where the borrower owes more on the property than it is worth?
- Does the business owner wish to shutter the operation at this location for other reasons?
In these situations, the foreclosure process can help to close the business down at that location. However, the courts may still hold the borrower responsible for any unpaid for or lost funds incurred by the lender in some situations.
Hiring An Attorney
Any business facing commercial foreclosure needs an attorney. The attorney will work to represent the individual in a court of law to ensure that the business's rights are respected and the business faces no other long term financial difficulty as a result of the foreclosure.
