What is Foreclosure?
For quite some time now, foreclosures caused by the economic downturn have dominated news media headlines. Foreclosure is a legal process where a creditor takes back your property because you've fallen behind in payments you've agreed to make on that property. If you don't pay your mortgage or your property taxes, for example, you may lose your home to foreclosure.
Sometimes you can save real estate by paying off debt - even after a foreclosure. This is called a redemption right. You can also lose personal property - such as cars, boats, or motorcycles - to foreclosure.
Some States Require Judicial Foreclosures
Judicial foreclosure means a lender must sue you before it can foreclose. You must be served with a foreclosure lawsuit, and you have a right to fight it in court. If a judge decides to allow the foreclosure, a sheriff will sell the foreclosed property to the highest bidder at public auction. The money from the sale is given to the lender to pay the mortgage balance, court costs, and attorney fees.
Some States Allow Non-Judicial Foreclosures
Non-judicial foreclosure means a lender does not need to sue you to foreclose. In Michigan, for example, foreclosures can happen after publishing notices in county newspapers and posting them at foreclosed properties. A sheriff then holds a public auction and sells the property without any court involvement. If you can't redeem the property, it is permanently lost to the auction buyer.
All States Allow Tax Foreclosures
If you do not pay your property taxes, you can lose your real estate to tax foreclosure. The government must provide notice to you prior to seizing and selling property for back taxes. Tax foreclosures are usually non-judicial. The sheriff conducts a property sale at a public auction. If you do not redeem the property, it is permanently lost to the auction purchaser.
Personal Property is Subject to Foreclosure
We usually think of foreclosures on real estate, but the law also allows foreclosures against personal property. For example, if you miss payments on your new motorcycle, your lender can take it back. Sometimes, property can be taken without notice. For example, if the motorcycle is parked on a public street the law may allow it to be repossessed without advance notice. Notice is usually required before a sale takes place, so you have a last chance to pay off the loan and get your property back.
A Foreclosure Lawyer Can Help
The law surrounding the foreclosure of real estate and other property is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a lawyer who deals in foreclosures.