How does foreclosure work in Tennessee?

Foreclosure happens differently in every state, and Tennessee homeowners should know what they can expect whether they are currently in debt or not.

Nobody wants to face a situation where he or she risks losing his or her Tennessee home, but it is an unfortunate reality that many people have to face. The ameliorating aspect of any foreclosure is that homeowners have an opportunity to appeal the process. In order to be best prepared to deal with this circumstance should it arise, it is best for people to be informed as to what the different types of foreclosure are. Beyond this basic knowledge, it is also helpful for homeowners to be aware of the specific rules and regulations that apply in their State.

The three types of foreclosure

The United States Department of Housing and Urban Development covers the basics of foreclosure so that people can know what to expect if they come under the line of fire. One type of foreclosure that does not exist in every State happens when the debt owed on a property exceeds the value of the property itself. In these instances, the court can designate a timeline in which the debtor must pay off a mortgage, and if the debtor cannot pay it in the allotted timeframe, the property will be returned to the mortgage holder.

Some mortgages contain a clause known as a "power of sale" clause. Those properties that fall under this category can be auctioned off by the mortgage holder after a certain amount of time has passed from the homeowner defaulting. These foreclosure auctions are considered non-judicial as they do not go through the court system.

A Judicial foreclosure, the only type of foreclosure allowed in all 50 States, is similar to the Power of Sale foreclosure in that the property is auctioned off when payments are not made within a timeframe. The difference here is that for this type of foreclosure, the lender first files a suit with the courts, and the auction that takes place after the payments fail is conducted by the local sheriff's office or by the court itself.

Foreclosure in Tennessee

In the State of Tennessee, the minimum time a debt on a property has to be unpaid in order for the mortgage holder to enter foreclosure proceedings is six months. Foreclosure also cannot be initiated over any debt less than 200 dollars. Because Tennessee is a Non-Judicial foreclosure State, the mortgage holder does not need to go through the courts to auction off the property. However, if the legality of the foreclosure is in question, the matter can always be appealed to the court by either party.

Those who are facing foreclosure in Tennessee may be looking for a way to delay or even avoid losing their homes entirely. An attorney in the local area who practices bankruptcy law may be able to help in these situations.