by Doreen Martel

Created on: November 20, 2011   Last Updated: November 21, 2011

When a homeowner in Indiana is facing foreclosure, not only do they run the risk of losing their home, but they also may be facing a deficiency judgment. Deficiency judgments may be requested by a lender when a home is sold at a foreclosure sale if the sale price does not cover the full amount of the outstanding mortgage.

Foreclosure process in Indiana

In order for a lender to foreclose on a property, they must go to court. The process is referred to as a judicial foreclosure proceeding. In order to complete the process, lenders must wait not less than three months to file a complaint. Once granted, the lender may sell the property at a foreclosure sale that is executed by the sheriff.

Advertising process

In order for a sale to be considered valid, the sheriff must follow specific advertising rules. These rules provide for the sale to be advertised for at least three weeks prior to sale. Sales must be published in a newspaper that is generally circulated and the first notice must appear at least 30 days prior to the sale taking place. In addition, the sheriff is required to notify the homeowner of the sale. The process for this is governed by Indiana Rules of Trial Procedure and state that the homeowner must be served in person.

Sale dates

Indiana foreclosures must be done during the day between 10am and 4pm. Sales take place between Monday and Saturday and if the property is abandoned, the lender will take immediate possession of the property. In general, the foreclosure process will take between five and seven months if the borrower does not win a delay, file for bankruptcy or contest the foreclosure.

Deficiency judgments

Indiana laws regarding foreclosure deficiency judgments are very confusing. Lenders are allowed to file for a judgment after the foreclosure sale under very specific guidelines. Generally, if the lender does not recoup the entire amount of the outstanding mortgage at a public sale, they may sue the homeowner for the difference. In some cases such as agricultural property, the homeowner may be entitled to remove any crops that were on the property for up to one year after the foreclosure. This right may be waived in the event that the lender agrees not to seek a deficiency judgment.

Homeowners who are facing foreclosure should understand their rights. When facing foreclosure they are not only risking losing their homes but, they may also be required to repay the lender any amount owed after the sale has taken place. In some cases, such as a deed in lieu of foreclosure or when their is a personal mortgage insurance policy, the amount of the deficiency may be reduced or eliminated. Contacting an attorney who specializes in foreclosure law may be necessary to avoid a deficiency judgment.

Indiana foreclosures are explained in the Indiana Code, Article 29 (Mortgages) and in Chapter 7 (Foreclosure, Redemption, Sale, Right to Retain Possession). Homeowners should review these statutes in order to understand their rights as well as the rights of the lender.

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