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FORECLOSURE AND BANKRUPTCY IN MICHIGAN
There are two ways for a mortgage company to foreclose on a property in Michigan, judicial foreclosure and foreclosure by advertisement. The first and least common is judicial foreclosure. This is foreclosure using the court system. Judicial foreclosure is typically done if there are title problems or if the mortgages do not have a provision allowing for foreclosure by advertisement. The process is similar to a normal collection law suit. A complaint is filed with the court. If it is not answered then the person is defaulted in 21 days and there is a 21 day appeal period. If the complaint is answered it can take months and months (even over a year) to complete a judicial foreclosure. The second and most common method of foreclosure is foreclosure by advertisement. First, the mortgage needs to have a provision that allows foreclosure by advertisement. Most mortgages contain this provision. The mortgage company must give notice of the default and publish a notice for 4 weeks. Most companies advertise for five weeks so that there is not a procedural problem. At that point the home is sold at a “sheriff’s sale”. Anyone can bid, but usually the only bidder is the mortgage company because the property is worth less than the mortgage. At this point there is a sheriff’s deed that provides that the owner has a redemption period of six months to a year to redeem the property. The time period is based on the size of the property. If the property exceeds 4 acres the redemption is one year. If the property is smaller, the redemption period is 6 months. During this time period the owner can occupy the property without making payments. At the end of the redemption period, if the property is not redeemed, the mortgage company is the new owner. If the house is not vacated at that point, the mortgage company must file a landlord tenant eviction proceeding to remove the occupant of the property. This usually takes an additional month. Usually the mortgage company doesn’t start foreclosure proceedings for a period of three months. In total, an owner in foreclosure can occupy the property from 8 months to fourteen months before being required to move. During this time, there are no payments being made or taxes being paid. A person can stop a foreclosure proceeding by filing chapter 13 bankruptcy proceeding before the sheriff’s sale. After the sheriff’s sale it is too late to file bankruptcy and save the home. If there is no deficiency owed on a foreclosure by advertisement. If there is a second mortgage, that mortgage becomes an unsecured debt after foreclosure of the first mortgage. They can sue you for the debt if it is not paid.
FORECLOSURE AND BANKRUTPCY ATTORNEYS- GRAND RAPIDS MICHIGANIf you're faced with a foreclosure situation you should contact attorney for a free consultation to discuss your rights and your options early in the process. We can explain your options and the bankruptcy code. Krupp Law Offices P.C. represents clients facing bankruptcy throughout West Michigan, including the cities of Grand Rapids, Holland, and Grand Haven, and the counties of Kent, Ottawa, Allegan, Barry, Newaygo, Montcalm, and Ionia. Our office can help. KRUPP LAW OFFICES PC 161 Ottawa NW Suite 201 616-459-6636 or e-mail |