In Kentucky, foreclosure is handled through the courts in a process called judicial foreclosure. Lenders must wait at least 120 days after missed payments before filing, and homeowners are then served with a summons and given 20 days to respond. If no response is filed, the court may issue a default judgment, allowing the Master Commissioner to schedule a public auction of the property.
If you are behind on payments or facing foreclosure, the experienced bankruptcy attorneys in Louisville, KY at O’Bryan Law Offices can help. Call (502) 339-0222 today for a free consultation and learn how we can protect your home and guide you toward financial relief.
Steps in the Kentucky Foreclosure Process
- Missed Payments: The process begins when you fall behind on one or more mortgage payments.
- Notice of Default: After about 120 days, the lender sends a formal notice warning of default.
- Complaint Filed: If payments remain unpaid, the lender files a foreclosure complaint in circuit court.
- Summons Served: The homeowner receives a summons, either by mail or delivered by the sheriff.
- Response Period: You have 20 days to respond to the complaint and present your defense.
- Default Judgment: If no response is filed, the court may grant the lender a default judgment.
- Summary Judgment: If you do respond, the lender may request a summary judgment without a trial.
- Judgment of Foreclosure: If the court sides with the lender, it issues a judgment of foreclosure.
- Order of Sale: The court directs the Master Commissioner to sell the property.
- Appraisal & Advertisement: The home is appraised and advertised in a local newspaper for three weeks.
- Foreclosure Sale: The Master Commissioner holds a public auction, and the highest bidder receives the deed.
| Stage | What It Means for Homeowners | Key Deadline |
|---|---|---|
| Early Delinquency | Missed payments trigger late fees but foreclosure can’t begin immediately. | Grace period varies |
| Default Notice | Lender warns you are in default and at risk of foreclosure. | After ~120 days |
| Court Filing | Foreclosure officially begins when the lender files a complaint. | No set deadline |
| Response Window | You must act quickly to dispute or defend the case. | 20 days |
| Judgment & Sale | Court authorizes sale; Master Commissioner handles auction. | 3 weeks of sale notice required |
Important Considerations for the Foreclosure Process in Kentucky
Pre-Foreclosure in Kentucky
The pre-foreclosure stage starts as soon as you fall behind on mortgage payments. Several key points to know include:
- Grace Period: Most lenders allow a short grace period—about 10 to 15 days—before charging late fees. These details can usually be found in your promissory note or monthly mortgage statement.
- Added Fees: Once the grace period ends, lenders may charge late fees and inspection costs, which can quickly make catching up on payments more difficult.
- Required Notices: Your lender must provide information on ways to avoid foreclosure. This includes sending a breach letter, which notifies you of the default and outlines how to resolve it.
- 120-Day Waiting Period: Under Kentucky law, lenders must wait at least 120 days after the first missed payment before filing a foreclosure complaint in court.
- Time to Act: This waiting period is designed to give homeowners the opportunity to explore alternatives such as loan modifications, repayment plans, or reinstatement of the loan before the case moves forward in the judicial system.
Kentucky Foreclosure Laws
Kentucky law requires that all foreclosures be judicial, meaning the process must go through the court system. A circuit court judge issues the final summary judgment before a foreclosure sale can take place, and federal law requires lenders to follow strict procedures before initiating the case.
Because these cases involve complex legal steps, working with a skilled foreclosure attorney is essential. An attorney can help you navigate the court process, protect your rights, and pursue defenses that may delay the foreclosure or even stop it altogether.
Judicial Foreclosure in Kentucky
As a judicial foreclosure state, Kentucky requires that a judge—or in some cases a Master Commissioner—oversee the foreclosure proceedings. The court reviews filings, hears responses from both sides, and ultimately authorizes the foreclosure sale.
This process begins with a foreclosure lawsuit, which gives homeowners the legal right to respond and defend themselves in court. Having an experienced attorney by your side is highly recommended to ensure the proceedings move as smoothly as possible and that your rights are fully protected.
Breach Letter Requirement
Before a lender can accelerate your loan and start the foreclosure, most mortgage contracts require them to send a breach letter. Key points to know include:
- Purpose: A breach letter notifies the borrower that they are behind on your mortgage and at risk of foreclosure.
- Requirements: This notice is generally a contractual requirement and must be sent before the lender can move forward with the process.
- Opportunity to Cure: The letter must explain how the borrower can resolve the default, giving them a final chance to catch up on payments and potentially keep your home.
- Consequences if Missing: Without providing this notice, the foreclosure case may not legally proceed.
Redemption Period in Kentucky
Kentucky law gives certain homeowners a limited right to redeem their property after a foreclosure sale. Important details include:
- What It Is: The redemption period allows foreclosed borrowers the chance to repurchase their home even after it has been sold.
- When It Applies: This right only applies if the property sells for less than two-thirds of its appraised value at the foreclosure auction.
- How Long It Lasts: In qualifying cases, the redemption period lasts up to six months after the sale.
- Legal Authority: This protection is outlined under KRS § 426.220
Deficiency Judgments in Kentucky
When a foreclosure sale does not bring in enough money to cover the total debt, the lender may pursue a deficiency judgment. Key facts include:
- What It Is: A deficiency judgment is the difference between what you owe on the mortgage and what the property sells for at foreclosure.
- Examples: If you owe $200,000 and the home sells for $150,000, the deficiency is $50,000. Similarly, owing $450,000 on a home that sells for $350,000 would leave a $100,000 deficiency
- Legal Authority: Kentucky law allows lenders to seek a personal judgment against the borrower to recover this difference.
- Court Process: In most cases, lenders obtain a deficiency summary judgment, which gives them the right to collect the remaining balance from you even after foreclosure.
- Homeowner Question: Many ask, “If my house is foreclosed, do I still owe the bank?” In Kentucky, the answer is often yes if a deficiency remains.
Kentucky Foreclosure Timeline
On average, a foreclosure in Kentucky takes about five months from start to finish. However, delays can occur if the homeowner files a defense, applies for loss mitigation, or seeks bankruptcy protection.
- When Foreclosure Begins: Federal and state law requires you to be in default for at least 120 days before the servicer can start the judicial foreclosure process. During this time, borrowers may submit a loss mitigation application to try to avoid court action.
- Court Process: Once the case is filed, the homeowner is served with a notice and has 20 days to respond. If no response is filed, the lender can request a default judgment, allowing the sale to move forward. If you do respond, the case enters litigation, where having an experienced foreclosure attorney can make a major difference.
- Foreclosure Sale: If the court issues a judgment, the Master Commissioner conducts a public sale. Lenders often make a “credit bid” equal to the debt owed, but they may also bid less. If the bid is lower than the balance, the lender may pursue a deficiency judgment for the difference. Any surplus from the sale goes back to the homeowner.
- Moving Out After Sale: Once the foreclosure sale is complete, the new owner must provide at least 10 days’ notice before taking possession. If the homeowner does not vacate, the buyer must obtain a Writ of Possession from the court to legally take over the property.
How Long Does the Foreclosure Process Take in Kentucky?
Going up against a mortgage company that is seeking a foreclosure judgment against you is very stressful. Facing the stress of financial hardship is already a prominent stressor, so how long will the foreclosure process last in Kentucky? While every case is unique and should be handled as such, a typical foreclosure should begin and end within 5 months on average. However, this process can lengthen or shorten, largely depending on the actions of the borrower.
How Can I Stop Foreclosure in Kentucky?
Thankfully, borrowers have a few options for avoiding a foreclosure complaint (and subsequent foreclosure auction). Three options are the most popular – filing for bankruptcy, reinstating the mortgage loan, and loss mitigation. We outline each option below.
Reinstate the Mortgage Loan
Kentuckians don’t automatically have the right to reinstate their loan before the foreclosure sale. However, if it was a high-cost home loan, they do have a statutory right to reinstate the loan. For these loans, lenders are required to give the borrower at least 30 days to reinstate the loan. However, certain mortgages (such as a federally backed mortgage loan) automatically include provisions for reinstatement.
File for Bankruptcy
Filing for bankruptcy is a valid and useful option for both avoiding foreclosure and regaining control of your finances. This is especially true if you’re in a bind, or if you’re only days away from the sale of your home.
As soon as you file for bankruptcy, you receive the protection of the automatic stay. The stay prevents the lender from foreclosing or collecting on your debts. Filing for Chapter 7 can help you delay the process, while Chapter 13 bankruptcy can help you save your home, but only if you can afford to pay back your debts.
To learn more about how bankruptcy can help homeowners facing foreclosure, contact the Kentucky bankruptcy attorneys at O’Bryan Law Offices.
Loss Mitigation Options
Another viable solution is to try to negotiate loss mitigation with your mortgage lender. Ideally, you could call them as soon as you realize you might have trouble paying your mortgage. In fact, the sooner you call, the more time you give yourself to find a solution with the lender. We recommend asking for your lender’s loss mitigation department. They will walk you through the process of pursuing loss mitigation options, such as loan modification.
Contact a Kentucky Foreclosure Defense Lawyer
At O’Bryan Law Offices, we’re highly passionate and skillfully successful when it comes to helping Kentucky and Indiana residents file bankruptcy. We understand that most people hear bankruptcy and imagine it as something they never want to resort to. However, our experienced attorneys know that it is simply a legal option for debtors to discharge their debts. Chapter 7 and Chapter 13 filings can and often do help those who are drowning in debt a helping hand.
Rather than working with a Kentucky debt consolidation company or pursuing a loan modification, consider bankruptcy. It guarantees you one thing that the other options cannot – legal protection. As soon as you file bankruptcy, you receive the protection of the automatic stay, and your creditors must cooperate with the bankruptcy court. If you’re reaching for a way out, consider bankruptcy.
To schedule a free consultation with a Louisville bankruptcy attorney, call 502-339-0222 today.
Kentucky Foreclosure FAQs
Most lenders will not start the foreclosure process after just one missed payment. Typically, you must be at least 120 days behind on your mortgage before a lender can file a foreclosure complaint in court. However, late fees and penalties may begin much sooner—often after a 10–15 day grace period.
The 120-day foreclosure rule is a federal requirement that prevents lenders from beginning foreclosure proceedings until a borrower is at least 120 days delinquent. This rule is designed to give homeowners time to explore alternatives, such as:
- Loan modification
- Repayment plans
- Reinstating the mortgage
- Filing for bankruptcy to stop or delay foreclosure
In Kentucky, the statute of limitations on foreclosure is generally 15 years for written contracts, including foreclosure cases and mortgages, under KRS § 413.090. This means lenders have up to 15 years from the date of default to file a foreclosure lawsuit. However, if payments are made or agreements are modified, that timeline may reset.