If you are facing foreclosure, it basically means that you, as a borrower, have been unable to make the mortgage payments on your home or property. Due to the country’s economic woes, more and more people are finding themselves in this position. It’s important for you to know not only how to avoid foreclosure, but also the two different kinds of foreclosure: judicial and non-judicial foreclosure. Every state in the country handles real estate foreclosures differently, and the terms and time frames vary.

The judicial foreclosure process is handled through the court system. The first step is a lender or creditor filing a complaint stating what debt is owned and then filing a notice of Lis Pendens, or pending lawsuit. The homeowner will receive notice of the complaint, usually by mail, or by publication, and he or she will have the change to be heard before the court. If the court decides the debt is valid, and the homeowner is in default, it will issue a judgment for the total amount due, including the court costs. You will have a set amount of time to either sell the home or negotiate to pay off the debt. If you cannot accomplish this, the property then goes to a sheriff’s sale, or public auction, that takes place in a public place, often on the courthouse steps. When the auction is over, the highest bidder will take ownership of the property once the court has confirmed the sale. The proceeds of the sale will first go to pay off the mortgage, and the rest of the money will go to other lien holders, and finally, to the mortgagor. During a judicial sale, you, as a homeowner, must be involved throughout the entire process so you have the opportunity to defend yourself in court.

With a non-judicial foreclosure process, the court is not involved, and the lender can begin foreclosure proceedings as soon as a homeowner defaults on his or her loan (such as missing a mortgage payment.) The requirements for filing a non-judicial foreclosure vary from state to state. In most cases, you will be sent a default letter. Many states also require a notice of default also be sent to the borrower via certified mail indicated that you have defaulted on your loan. In some states, the mortgage company or lender can proceed without contacting the homeowner. A notice of default will give you a certain amount of time by which you must pay off the loan to avoid foreclosure proceedings. If you do not “cure” the default within the set time frame, the lender will send a notice of sale. This notice may also be posted in public offices and published in local legal publications. After the time period has expired, a public auction will be scheduled to sell the property to the highest bidder. Because the laws around non-judicial foreclosures differ depending on the state, it is critical that you know the procedures for your state.