How to avoid foreclosure in Indiana

How foreclosure works in Indiana, step by step

1. Missed payments and the pre-suit notice

   Federal rules generally stop your servicer from starting a foreclosure until you are more than 120 days behind. In Indiana the lender must also mail you a pre-suit notice by certified mail at least 30 days before it files. The notice tells you that you are in default and gives contact details for the Indiana Foreclosure Prevention Network, which offers free counseling.

   12 C.F.R. § 1024.41(f); Ind. Code § 32-30-10.5-8(a)

2. The lender files a lawsuit

   The lender files a foreclosure complaint and you are served with a summons. The first page of the summons must tell you about your right to a settlement conference, and the court mails you its own notice too. Under the Indiana Trial Rules a response to a complaint is due within 20 days after service, so read the summons for your exact deadline and do not ignore it.

   Ind. Code § 32-30-10.5-8(c), (d); Ind. Trial Rule 6(D)(1)

3. Ask for a settlement conference

   You have 30 days after you are served with the complaint to tell the court you want a settlement conference. You can return the request form, call the court, or go to the court in person. The court then sets a conference 40 to 60 days out, and you must send your loss mitigation package to the lender's attorney and the court 30 days before the conference.

   Ind. Code §§ 32-30-10.5-8(c), 32-30-10.5-10(a)

4. Settlement conference or judgment

   If you ask for a conference in time, the court must hold off on ruling for the lender until the conference ends with an agreement or without one. If there is no agreement, or you did not ask for a conference, the court can enter a foreclosure judgment and order the home sold. No judgment can be entered until at least 60 days after the pre-suit notice was sent.

   Ind. Code §§ 32-30-10.5-8.5, 32-30-10.5-9

5. Waiting period and notice of sale

   The sale process cannot start until 3 months after the complaint was filed, for mortgages signed on or after July 1, 1975. The sheriff must then advertise the sale once a week for 3 weeks, with the first notice at least 30 days before the sale, and must serve you with a copy of the notice. If a court finds the home is abandoned, the sale can move ahead right after judgment.

   Ind. Code § 32-29-7-3

6. Sheriff's sale

   The sheriff sells the home at public auction. Until the sale you can stop it by paying the full judgment, interest and costs. If you live in the home, you can generally stay there rent free until the sale as long as you keep paying the property taxes and do not damage the property.

   Ind. Code §§ 32-29-7-3, 32-29-7-7, 32-29-7-11

7. After the sale

   The sheriff gives the buyer a deed right after the sale, and there is no right to buy the home back. Plan to move out, because the buyer can apply to the court clerk for a writ of assistance directing the sheriff to deliver possession. Any money left over after the debt and costs are paid goes to the court clerk for you.

   Ind. Code §§ 32-29-7-9, 32-29-7-10, 32-30-10-14; Ind. Trial Rule 70(A)

Indiana foreclosure deadlines to know

These are the periods written into the law. Your own dates are on the notices you received. If a notice and this page disagree, trust the notice and ask a counselor or lawyer.

Your rights as a homeowner in Indiana

Other Indiana protections

• Pre-suit notice with counseling information

  At least 30 days before filing, the lender must send you a notice by certified mail on a form set by the state housing agency. It must tell you that you are in default, urge you to see a foreclosure counselor, and list your rights to redeem and to stay in the home until the sale.

  Ind. Code § 32-30-10.5-8(a)

• Right to a settlement conference

  Owners living in the home can require the lender to meet about options to avoid foreclosure. The lender's attorney must attend, an authorized representative of the lender must be available by phone, and the lender must send you a payment history and payoff figures 30 days before.

  Ind. Code § 32-30-10.5-10

• No judgment while the conference is pending

  Once you ask for a conference, the court treats your request as your appearance in the case and must hold off on granting the lender judgment until the conference ends.

  Ind. Code § 32-30-10.5-8.5

• Right to stay in your home until the sale

  If you own and live in the home, you can stay rent free until the sheriff's sale as long as you keep paying property taxes and special assessments and do not let the property be damaged.

  Ind. Code § 32-29-7-11(b)

• Abandonment must be decided by a court

  A lender that wants a faster sale because it says the home is abandoned must file a petition and serve you. You can appear and object, so respond if you still live there.

  Ind. Code §§ 32-30-10.6-3, 32-30-10.6-4

Indiana mortgage assistance programs

If the home is sold for more than you owe

Sale money first pays the costs of the sale and then the mortgage debt, interest and court costs. Anything left over must be paid to the clerk of the court, and the court directs it to you, your heirs, or someone you have assigned it to. If your home sells for more than you owed, ask the court clerk in your foreclosure case how to request the surplus.

Ind. Code § 32-30-10-14

Ways to avoid foreclosure

Most of your options come from federal rules and from whoever owns or insures your loan, so they work the same way in Indiana as anywhere else. What changes by state is how much time you have to use them.

• Repayment plan
• Forbearance
• Payment deferral or partial claim
• Loan modification
• Reinstatement
• Short sale
• Deed in lieu of foreclosure
• Chapter 13 bankruptcy