The Different Shades of Foreclosure

For quite some time now, foreclosures caused by the Recession have been in the headlines of our news. Foreclosure is a legal process where a creditor takes back your property because you’ve fallen behind on payments that you agreed to make of that property. If you don’t pay your mortgage or your property taxes, you may be at risk to lose your home to foreclosure.

Sometimes you can save real estate by paying off debt – even after the property was foreclosed on. This is called a redemption right. In addition to real estate, you are also at risk to lose other personal property such as cars, boats, or motorcycles.

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 the right to fight the foreclosure in court. If a judge decides to allow the foreclosure, a sheriff will sell the foreclosed property to the highest bidder at a public auction. The money from that sale is then 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. For example, in the state of Michigan, foreclosures can happen after publishing notices in county newspapers and posting them at foreclosed properties. In a similar fashion to judicial foreclosures, a sheriff then holds a public auction and sells the property, but without any court involvement. If you can’t redeem the property before it goes to auction, it is permanently lost to the auction buyer.

All States Allow Tax Foreclosures

If you do not pay your property taxes, you are at risk of losing your property 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 and if you don’t redeem the property, it is permanently lost to the auction buyer.

Personal Property is Subject to Foreclosure

When foreclosure comes to mind, most people think it is strictly related to real estate, but the law also allows foreclosures against your personal property. If you miss payments on your new motorcycle, your lender has the right to take it back. Sometimes, it is even allowed for a lender to take property without notice. For example, if the motorcycle you purchased 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, giving you one last chance to pay off the loan and retain your property

In any case, foreclosure can be a scary thing. It is much more complicated and encompasses more than just real estate. If you or a loved one is experiencing foreclosure or may be at risk of experiencing one, contact the experienced Phoenix bankruptcy attorneys today for a free consultation. We are ready, willing, and able to help! Contact us today!


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