Foreclosure Process and Debtor’s Rights

Foreclosure is a stressful process for anyone, but if a lender is foreclosing against you make sure you know your rights and what property is protected from foreclosure. First, for a foreclosure action to be brought against a debtor, the debtor must be in default on payments. This means that the debtor must have missed a payment or not paid a monthly payment in full, including any late fees. Once a debtor is in default, the creditor may “accelerate” all payments owed, meaning the creditor declares the full debt payment immediately due. Under many loan agreements, until the creditor has notified the debtor of the acceleration of the full debt, the debtor can reinstate the debt to the normal monthly payment schedule by paying the full past due amount. Once a debt has been accelerated, many lenders will pursue foreclosure.

A debtor has a right to receive a pre-suit notice at least thirty days before a creditor files a foreclosure action. This notice must advise the debtor of the default and provide information regarding seeking assistance from a mortgage foreclosure counselor. The required notice must also inform the debtors of certain actions she can take before the foreclosure sale, including redeeming the property under certain circumstances and retaining possession of the property under certain conditions. Lastly, the debtor must be notified that she has a right to participate in a settlement conference with the creditor. If the debtor exercises this right, she has the right to bring an attorney with her to the conference. The goal of the conference is to reach a settlement agreement that will prevent foreclosure.

If you have any questions about the foreclosure process and the rights of a debtor during the process, please contact McNeelyLaw LLP by calling (317)825-5110.

Disclaimer: This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.