What Are the 2 Types of Foreclosure and the Main Differences Between Them?

When an individual has worked hard to keep up their payments and ensure their home is paid off, it can be devastating to face foreclosure. No one wants to give their home to the lender. There are two types of foreclosures, and it is important homeowners are aware of both so they can exercise their rights to seek help.

Why Do Foreclosures Occur?

The vast majority of lenders will not pursue a foreclosure until a homeowner is three to six months behind on their payments. Some lenders are stricter in this regard and can start the process as soon as three payments are in arrears.

If you are far behind on your payments, it’s time to learn about your bankruptcy options. The options that are available will depend on the type of foreclosure you have.

Types of Foreclosure

Once someone is at least 120 days behind on their payments, the foreclosure process can begin. There are two main types of foreclosure, and the information below will help you to understand them so you can make the right decisions on how to keep your home.

  • Judicial Foreclosure A judicial foreclosure occurs when a lender informs a homeowner of their default on the loan and the individual fails to take care of the balance. Once this occurs, the lender files a lawsuit against the homeowner and the property is auctioned after the trial process.
  • Non-Judicial Foreclosure In a non-judicial foreclosure,the lender has the power of sale. The homeowner will still be notified of the default and will be given time to make up the payments. If they do not pay the payments, the lender has the right to sell the property.

How to Get Legal Help

Many homeowners are not aware they have the right to file bankruptcy, which can often effectively stop the foreclosure process. Meeting with an attorney will help the individual to learn about bankruptcy and how it will cause an immediate suspension of the foreclosure process.

Chapter 13 is the bankruptcy process that helps homeowners avoid foreclosure. This type of bankruptcy is also known as the wage earner’s bankruptcy. The individual filing for bankruptcy must be able to make monthly payments to catch up on their payments in arrears.

Once the bankruptcy is in effect, the mortgage company is sent a notification of the filing. This letter prevents the mortgage company from further pursuing the foreclosure. It gives the homeowner time to catch up on their payments and keep their home.


Facing the loss of a home can be devastating after a person has worked diligently to make the payments on time. Thankfully, there are legal options that can help a homeowner avoid foreclosure.

As soon as a person learns they are going to be behind on their payments, they need to contact the lender to make arrangements. It is important a homeowner does not wait too long to seek legal help.

Getting an attorney involved as soon as possible will protect the rights of the homeowner through the process. The attorney will determine if the individual has the right to file for bankruptcy and will help them through the process, including everything from filing to making payments. The goal of bankruptcy is to give the homeowner more time to catch up on their payments so they are able to prevent foreclosure.


Arnel Ariate is the webmaster of Money Soldiers.

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