A homeowner who has been served with foreclosure papers should be aware of legal rights that may help with settlement of the case.

According to John G. O’Brien, 2009-10 president of the Illinois State Bar Association (ISBA) and a real estate attorney from the Chicago suburb of Arlington Heights, a homeowner who has been notified of foreclosure should first contact a lawyer who is experienced in foreclosure matters to help determine what options may best help fight the foreclosure.

O’Brien says that homeowners may have the option of “reinstatement” in order to catch up on missed payments. This must be completed within 90 days from the date of the foreclosure action. In addition, the homeowner must pay the mortgage company’s attorney fees and court costs. If the mortgage is reinstated, the lawsuit will end and the mortgage will remain intact. Those who choose this action should be aware that it can only be used once every five years.

Filing for bankruptcy is another option to deal with home foreclosure. This automatically stops the foreclosure while the bankruptcy case proceeds.

Another option is redemption or paying off the entire loan. “You have seven months from the date you are served with the foreclosure notice or within three months from the date of entry of a foreclosure judgment,” says O’Brien. “This can be a tough option for someone who is already financially strapped,” The homeowner must pay off not only the entire balance, but all the interest owed, as well as attorneys’ fees and court costs.

Even after a foreclosure has been filed a homeowner can continue to live in the home without further payments until the period of redemption expires. After that time, one may stay in the house until 30 days after the confirmation of the judicial sale – if he or she pays a fair amount for rent.

“On occasion, the new home owner will agree to lease the home back to its former owner,” says O’Brien. “It’s certainly an option that would allow you and your family to remain in the home.”

There are also several government options available to help stave off foreclosure. For further information, visit the U.S. Department of Housing and Urban Development at www.hud.gov or contact an attorney.

Note: This information was prepared as a public service by the Illinois State Bar Association and is a joint project with the Illinois Press Association. Its purpose is to inform citizens of their legal rights and obligations.