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Roger, Attorney
Category: Bankruptcy Law
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Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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What is the process in foreclosing and how long does ...

Resolved Question:

What is the process in foreclosing and how long does that stay on your credit report? Or is it better to file bankruptcy. I recently lost my job again and am looking for opportunities outside of Michigan.
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 8 years ago.

Michigan foreclosures are primarily handled out of court. The foreclosure process can take 3-14 months depending on the length of the redemption period. The typical foreclosure takes about 8 months.

Court foreclosures are permitted in Michigan; however, most mortgages contain a clause enabling a lender to sell a property out of court once a borrower defaults. While Michigan law does not require that a lender send out a default notice to the borrower before scheduling a foreclosure sale, the mortgage may require the notification. The borrower's right to stop the foreclosure by paying off the default is also dictated by the mortgage.

The foreclosure sale usually occurs about two months after the lender starts the foreclosure process. A notice of sale is published once per week for four weeks in a local newspaper, and the sale may not be less than 28 days from the first publication date. The notice is also posted on the property during the publication period. The notice of sale must contain the lender and borrower names, mortgage information, the default amount, a legal description of the property, and the length of the redemption period.

A trustee or sheriff conducts the public auction between 9:00 a.m. and 4:00 p.m., usually at the county courthouse. Anyone may bid, and the property is sold to the winning bidder. The sale may be postponed by posting a notice of adjournment at the time and location of the sale.

The person conducting the sale completes the necessary documents to transfer ownership to the winning bidder at the sale, and those documents must state the redemption expiration. The redemption period varies, but typically runs six months from the foreclosure sale date. During this time, the borrower can redeem the property by paying the winning bid amount and applicable costs.

A foreclosure will stay on your credit report for 3-5 years.

It is better to go through a foreclosure than to file bankruptcy, which stays on your credit report from 7-10 years. Plus, filing bankruptcy is more costly and can ruin your entire credit. A foreclosure is not good, but you'll still have some credit.

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