Can I Reach an Agreement with My Creditor to Stop Foreclosure? How Payment Plans Work

Can foreclosure end by agreement, or only by sale?

Foreclosure on a property need not necessarily end in a court sale. The Execution Order (exekuční řád) No. 120/2001 presumes that proceedings are conducted in favour of the creditor. If the creditor consents to suspension or postponement, the enforcement officer must respect their position (see § 55 and § 56 of the Execution Order).

Between the enforcement order and the court sale, weeks or months typically pass. This is a window for negotiation. The sooner you approach your creditor, the more options usually remain open.

It is important to distinguish two things: postponement of foreclosure (proceedings are temporarily suspended) and termination (proceedings end definitively). A payment agreement typically combines both: the foreclosure is postponed, and once you comply, it is terminated.

Why might a creditor be interested in an agreement?

From the creditor's perspective, the goal is to be paid, not to own the property or deprive you of your home. A court sale is often less certain than it appears:

• proceedings take time and the outcome is unpredictable;
• from the court sale proceeds, the cost of proceedings are paid first, and only then the creditors, so an individual creditor may not recover the full claim;
• the minimum bid is two-thirds of the expected value (§ 336e of the Civil Procedure Code – občanský soudní řád – No. 99/1963), so the final price may not meet expectations;
• if there are other mortgages or enforcement proceedings on the property, the order of satisfaction can be complicated.

Moreover, a court sale is typically the most expensive option for you. If the debt can be repaid another way, both parties may benefit. However, this is not a rule: some creditors may insist on completing the foreclosure, especially if previous agreements were not honoured.

How to approach your creditor and what to offer

It is wise to communicate in writing and to copy the enforcement officer, so there is a record of negotiations. Practical steps:

1. Find out the current state of the debt—ask the enforcement officer for a breakdown of principal, interest and enforcement costs.
2. Calculate what you can actually afford. Base this on regular income and expenses, not wishful thinking.
3. Prepare a concrete proposal: the amount and schedule of instalments, or a single payment of part of the debt from the sale of other assets or family support.
4. Back up your credibility—provide proof of income and evidence of the source of funds for the first instalment.
5. Request written confirmation of the creditor's agreement, including when and under what conditions they will submit a request to terminate the proceedings or consent to postponement.

A sober, feasible offer usually convinces a creditor more than a high promise. A broken agreement typically means trust is gone and the proceedings continue.

What should the agreement contain?

It is wise to put a payment agreement in writing and clearly specify:

• the total amount and what it comprises (principal, interest, costs);
• the amount and due date of each instalment and the account number for payment;
• what happens if a payment is late (whether the agreement ends or there is a grace period);
• when a request to terminate the foreclosure will be submitted and who bears the costs;
• whether the creditor agrees to postpone the court sale while you comply.

A verbal agreement with the creditor does not bind the enforcement officer to terminate proceedings. It is best to send payments in a traceable way and keep records. General provisions on contracts and obligations are in the Civil Code (občanský zákoník) No. 89/2012. Cash payments are restricted by law No. 254/2004, so it is safer to pay by bank transfer.

Who pays enforcement costs and when is foreclosure stopped?

Even if you agree with the creditor, the debt usually has multiple components. In addition to the original claim, enforcement costs and the enforcement officer's fee arise. Who bears these costs when the proceedings are stopped is governed by the Execution Order No. 120/2001 (especially provisions on enforcement costs) and the circumstances of termination. You should therefore establish during negotiations whether costs are included in the agreed amount.

Termination of foreclosure typically occurs when the debt is paid or the creditor withdraws their claim. If you want to keep the property and settle the debt in one payment or via a loan, see also redeeming the property from foreclosure.

When an agreement is not enough and what to avoid

An agreement with one creditor will not resolve the situation if there are multiple enforcement proceedings or your total debts are too high. In that case, you may want to consider a solution under the Insolvency Act (insolvenční zákon) No. 182/2006 (debt settlement – oddlužení), or selling the property under the conditions described on selling property in foreclosure.

Beware also of quick-fix offers, such as loans secured by a mortgage on your property or sale-and-leaseback schemes. These can make your situation worse; read more about the risks of sale-and-leaseback. Do not sign anything in panic and have any contract reviewed by an independent expert.

If a sale is already scheduled, read what works and what is myth. You can also discuss your situation free of charge through our assessment form. This text is for information only and does not replace legal advice.