Foreclosure - Beneficial for Borrowers?

Foreclosure is a technical term given to a process that occurs when a person is unable to pay the loan on time and is then declared as a defaulter. The defaulter then sells his/her property in order to compensate the loss and pay the loan in full. In some case, foreclosure brings annihilation to the borrower.

Types of Foreclosure; Foreclosure is of 2 types.

• Judicial foreclosure.
• Non-Judicial foreclosure.

Judicial Foreclosure

If the foreclosure is settled by the court then it is under the category of “judicial fore closure”. In this case, the lender (person who provided the loan) can directly take over the property of the borrower with court intervention. Court is responsible for taking all the decisions regarding foreclosure.

In judicial foreclosure, a legal notice is first sent to the borrower. If the borrower responds in a timely manner, the court then arranges for the auctioning of the borrower’s property. The whole procedure is in followed in a formal manner.

Non-Judicial Foreclosure

When both parties decide to settle the loan without the intervention of the court, it is termed as “Non-Judicial foreclosure”. In such a foreclosure, the lender is responsible for taking all the decisions.

Foreclosure is a way to help borrower pay all his/her dues. The best way to recover money is to auction all the properties and if some amount is left after the final settlement the same is paid to the borrower.

Many people are in favor of foreclosures as they believe it to be the right way of paying the money without any trouble. Some borrowers often pay their dues by another means like borrowing from the market at high interest rates. Foreclosure is far better than paying for a loan by taking another loan and that too at a high interest rate.