Foreclosure is a common side effect of bankruptcy, especially in down economic times, and it doesn’t usually come as a big surprise to homeowners. Most people realize, well before it happens, that they’re going to have trouble making their mortgage payments. Foreclosure can be caused by numerous financial difficulties – unemployment, unexpected medical bills, higher adjustable mortgage rates, and more.
Once you fall behind on your payments, you’ll probably have a few months before your lender begins the foreclosure process. The fact that foreclosure is a process (and often a long one) is good news for you. You don’t need to panic. You’ll have time to plan, negotiate, and evaluate your options — if you find a lawyer sooner than later.
Types of Foreclosure
Most foreclosures fall under one of two categories: judicial (in court) or nonjudicial (out of court).
Judicial Foreclosure
In judicial foreclosures, your lender begins by filing a foreclosure lawsuit at the local court. You will then receive official notice of the lawsuit when a sheriff or process server personally serves you with (or posts on your door) the following 2 things:
- A summons [document] that explains your right to file a written response to the lawsuit and telling you how long you have to do so, AND
- A copy of the document (called a petition or complaint) which requests the actual foreclosure and describes why the judge should issue a foreclosure order.
You can contest a foreclosure or let it proceed. If you contest, the court will set a date for a hearing, at which you and the lender present your evidence and arguments in court. After the hearing, the judge will either:
- Order the foreclosure to proceed (and, in many states, set the sale date of the property), OR
- Delay the verdict to give the lender more time to provide additional information (proof of ownership, for example), OR
- dismiss the case, sending the lender back to reconstruct their case
Nonjudicial Foreclosure
If your property is in a nonjudicial foreclosure state, you probably signed two core documents when you bought or refinanced:
- A promissory Note
- And a Deed of Trust
Your deed of trust (when it was recorded in your county’s land records office) turned the promissory note into a debt secured by a lien (legal claim) on your home. The deed of trust authorizes the entity named as the trustee in the deed of trust to foreclose on the property if you ever default. The deed of trust typically allows the foreclosure to proceed outside of court.
Your state’s law determines the specifics of the foreclosure procedure, including how much notice you will get, how the property will be sold (usually at a public auction), and what rights (if any) you have to reinstate the loan before the foreclosure date or recover title to the property after it’s sold.
Foreclosure Help
In any event, we strongly suggest consulting with a Top Tier Lawyer before handling a foreclosure alone. They will help you fully understand the process and ensure the best outcome. Use our Find a Lawyer form to schedule a free consultation for your foreclosure case.