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The Foreclosure Process in Indiana

Indiana is a judicial foreclosure state. While some states allow the lender to manage the foreclosure process, all foreclosures in Indiana require a court proceeding. Judicial foreclosures tend to take longer and are more regulated than non-judicial foreclosures.

The foreclosure process in Indiana begins with the filing of a complaint with a court in the county where the real estate is located. Upon hearing the complaint, a judge may issue a judgment or decree of sale. No earlier than three (3) months after the original complaint is filed, the sheriff may set a date for the foreclosure sale. The sheriff must follow notice requirements, including advertising the sale in a newspaper and notifying the property owner at least thirty (30) days prior to the sale. All time limitations may be waived at the request of the property owner in default.

The sale can be any day except for Sunday, at any time between 10am and 4pm. Indiana Code is not specific on how the sale must take place, only that the property must be sold "in a manner that is reasonably likely to bring the highest net proceeds from the sale." If the sale does not garner enough money to pay off the mortgage and sale expenses, a deficiency judgment can be obtained by the lender against the borrower for the remainder of the mortgage amount.

Immediately after the sheriff's sale, the sheriff delivers a deed to the successful bidder. Indiana does not allow for a redemption period after the sheriff's sale, hence a purchaser at a sheriff's sale takes immediate possession and ownership of the property.

A typical foreclosure in Indiana could take 150-200 days depending on the court schedule. Delays can occur if the property owner contests the foreclosure action, defers required hearings, and/or files for bankruptcy. An accelerated schedule is available when dealing with vacant or abandoned property.

With the number of defaulting borrowers rising, it has become more difficult for lenders to recover the amounts they are owed at foreclosure sales. Lenders in today's market are looking for alternatives to foreclosure sales, such as loan modifications and short sales (see related article).

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