What To Do When Your Place Of Business Is In Danger Of Being Closed Soon
Being placed into foreclosure is a scenario that no owner of commercial real estate wants to have. However, in times of difficult economic circumstances, it is not uncommon for even the most financially sound businesses and owners to fall on hard times and ultimately face the prospect of foreclosure.
Foreclosure occurs when your bank, business, or private lender takes possession of the property. There are several reasons why a foreclosure might take place including job loss or death in the family, filing for bankruptcy, or even just moving and not leaving a forwarding address.
Sometimes, foreclosure happens because you simply cannot afford to keep up with your loan payments any longer. Whatever the reason is that caused the foreclosure it is very important to know what you can do to help protect yourself if your business is in danger of being closed down.
Here are some things you can do to avert disaster.
Request Loan Modification
When your place of business is in danger of foreclosure, the most important thing to do is contact the lender. Most commercial lenders will work with you to make sure that your business continues to operate. This means discussing things such as extending the loan term or reducing the interest rate. Loan modification can be a viable option for struggling businesses to stay afloat without taking drastic measures.
Find an Alternative Means of Finance
To avoid foreclosure, try to find other means or financing methods, including getting a loan. There are some ways and avenues that you can go through. This approach should only be taken as an alternative to foreclosure options. As you have failed to resolve and manage the debt incurred due to the foreclosure, you will still be liable for paying off the same.
Offer Personal Guarantee
When your business is in danger of foreclosure, in these tough economic times the best thing you can do is get proactive. There are a lot of different things you can do, but personally guaranteeing the loan is one way to prevent allowing your business to fall into the hands of someone else. The personal guarantee might help you retain control of your business and give you more options for future refinancing.
Know Your Rights
Many people don't know that your lender must abide by certain rules set by Congress. A foreclosure attorney in Fort Lauderdale observed that a lot of people are oblivious to what their rights entail as borrowers, which mostly leads to making wrong decisions and thereby losing their business.
Your lender can't take action to foreclose on your place of business until it has gone through the proper steps, like sending you a written notice that tells you how to avoid foreclosure. This document is called a "Notice of Default." And if it isn't included in your loan documents, they can't foreclose until after the first of three years after the loan was made.
However, you must take the time to learn and understand the laws concerning foreclosure and your rights as a borrower.
Consider Deed in Lieu of Foreclosure
Deed in Lieu of foreclosure can be a viable alternative to foreclosure, but only if the lender agrees to consider it. A borrower who requests it is in a stronger position to negotiate with the lender than one who simply walks away from the property, allowing it to go into foreclosure.
Avoid Foreclosure Prevention Companies
These companies offer to negotiate a loan modification for you but will charge you for services: some will charge monthly fees and others will require you to pay a percentage of your mortgage fees each month. The companies have one goal: to make money.
File for Bankruptcy
Many people think filing for bankruptcy means the end of the business. But in reality, it can be the best way to save your business from foreclosure. If your business is in danger of foreclosure, file for bankruptcy protection. Hire a lawyer with experience in corporate bankruptcy law and file for Chapter 11 protection immediately.
A corporation is a separate legal entity apart from its owners. This separateness makes it necessary to have the corporate form its bankruptcy case, rather than make the managers or officers personally liable for any debts.
Foreclosure in your place of business can happen if you are unable to make the required mortgage repayments or after a foreclosure order has been approved by the court. It is one of the most frightening situations that you may be in, not just financially, but also for the impact it may have on your reputation and brand. If this ever happens, ensure to be prepared beforehand by looking into what options are available and considering all other options open to you that could save your business before it is too late.