How Foreclosure Works in Indiana & Kentucky: Complete Timeline and Your Options

If you've missed a mortgage payment or received a letter from your lender that you weren't expecting, you're probably searching for answers. How does foreclosure actually work? How much time do you have? What can you do to stop it?

This guide covers the complete foreclosure process in both Indiana and Kentucky. Both states use judicial foreclosure, meaning the lender must file a lawsuit and go through the court system. But the timelines, notice requirements, and redemption rules differ in important ways. Understanding these differences matters, especially if you own property near the border region around Louisville, Southern Indiana, or Northern Kentucky.

We're going to walk through every stage, from the first missed payment to the sheriff's sale, and lay out every option you have at each step.

Understanding Judicial Foreclosure

Before diving into timelines, it helps to understand what "judicial foreclosure" means. In both Indiana and Kentucky, a lender cannot simply take your home. They must file a civil lawsuit, serve you with legal papers, and get a court judgment before your property can be sold at auction.

This is actually good news for homeowners. The judicial process takes time, and at nearly every stage, you have options to slow down, stop, or resolve the foreclosure. The worst thing you can do is ignore the process. The best thing you can do is understand it.

The Indiana Foreclosure Timeline

Indiana foreclosure is governed primarily by Indiana Code 32-30-10 (mortgage foreclosure) and related statutes. Here's what happens at each stage:

Stage 1: Missed Payments (Day 1 - Day 120)

Foreclosure doesn't begin the moment you miss a payment. Federal law under the Consumer Financial Protection Bureau (CFPB) rules requires mortgage servicers to wait at least 120 days after the first missed payment before filing a foreclosure lawsuit. During this period:

• Your lender will contact you by phone and mail about the missed payment
• Late fees will accumulate (typically 4-5% of the monthly payment)
• After 30 days, the missed payment is reported to credit bureaus
• At 36 days past due, the servicer must make "good faith efforts" to contact you about loss mitigation options
• At 45 days past due, the servicer must send you a written notice about available loss mitigation options

Stage 2: Notice of Default and Complaint Filed (Month 4 - Month 5)

Once 120 days have passed, the lender's attorney will file a foreclosure complaint in the Indiana circuit or superior court in the county where the property is located. Under Indiana law:

• You will be served with a summons and complaint, either in person or by certified mail
• The complaint will state the amount owed, the legal description of the property, and the lender's claim
• If the lender cannot serve you personally, they may use service by publication in a local newspaper
• A lis pendens (notice of pending action) is recorded against the property, which shows up in title searches

Stage 3: Response Period (20 Days After Service)

After being served, you have 20 days to file a response with the court (under Indiana Trial Rules). This is a critical deadline. If you do not respond:

• The lender can request a default judgment, which speeds up the process significantly
• You lose the opportunity to raise defenses (improper notice, errors in the amount owed, predatory lending claims, etc.)

If you do respond, the case proceeds through the normal litigation process, which can add months to the timeline and gives you more time to explore alternatives.

Stage 4: Court Proceedings and Judgment (Month 5 - Month 8)

If no answer is filed, the lender can move for default judgment relatively quickly, sometimes within 30-60 days. If you do answer, the case follows the normal civil litigation timeline:

• Discovery and motions may be filed
• Settlement conferences or mediation may be ordered by the court
• The lender will eventually move for summary judgment
• The court enters a judgment of foreclosure, which includes the total amount owed and orders the property sold

Under IC 32-30-10-9, the court's judgment will set the terms of the sale, including the minimum bid amount and the timeline.

Stage 5: Sheriff's Sale (Month 7 - Month 10)

After judgment, the court orders a sheriff's sale. In Indiana:

• The sale must be advertised in a newspaper for three consecutive weeks before the sale date (IC 32-30-10-9)
• The sale is conducted by the county sheriff at a public auction
• The property goes to the highest bidder, though lenders often bid the amount of the debt (a "credit bid")
• The sale must be confirmed by the court before it's final

Stage 6: Post-Sale and No Redemption Period

Here is one of the most important things Indiana homeowners need to understand: Indiana does not have a statutory right of redemption after the sheriff's sale. Once the sale is confirmed by the court, it's done. You cannot buy the property back.

This is different from many other states. In Indiana, your only window to save the home or get value from it is before the sheriff's sale.

Overall, the Indiana foreclosure process typically takes 5 to 10 months from the first missed payment to the sheriff's sale, depending on whether the homeowner responds to the complaint and whether the court has a backlog.

The Kentucky Foreclosure Timeline

Kentucky foreclosure is governed by KRS Chapter 426 (judicial sales) and KRS Chapter 381 (property rights). Like Indiana, Kentucky uses judicial foreclosure. However, there are significant differences in the timeline and post-sale rights.

Stage 1: Missed Payments (Day 1 - Day 120)

The federal 120-day pre-foreclosure waiting period applies in Kentucky just as it does in Indiana. The same CFPB requirements for borrower outreach and loss mitigation notices apply. This stage looks essentially identical in both states.

Stage 2: Complaint and Lis Pendens Filed (Month 4 - Month 6)

After the 120-day waiting period, the lender files a foreclosure complaint in the Kentucky circuit court for the county where the property is located. Key differences from Indiana:

• Kentucky requires service under the Kentucky Rules of Civil Procedure, which allow personal service, service by certified mail, or warning order (publication)
• If the borrower cannot be located, the court appoints a warning order attorney to protect the borrower's interests
• A lis pendens is filed, putting the public on notice of the pending foreclosure

Stage 3: Response Period (20 Days After Service)

Under Kentucky Rules of Civil Procedure, you have 20 days to file an answer after being served. As with Indiana, failing to respond allows the lender to seek a default judgment. Filing an answer extends the timeline and preserves your rights.

Stage 4: Court Proceedings and Judgment (Month 6 - Month 10)

Kentucky courts often move a bit more slowly than Indiana courts on foreclosure cases. The process includes:

• The lender files for summary judgment if the borrower doesn't contest the debt
• The court enters a judgment and order of sale
• Under KRS 426.200, the court appoints a Master Commissioner to conduct the sale
• The Commissioner sets a sale date, typically 30-60 days after judgment

Stage 5: Commissioner's Sale (Month 8 - Month 12)

In Kentucky, the foreclosure auction is conducted by the Master Commissioner rather than the sheriff. Key details:

• Notice of sale must be published and posted according to KRS 426.200
• The sale is a public auction, typically held at the county courthouse
• The highest bidder must typically post a bond or deposit (often 10% of the bid) at the time of sale
• The sale must be confirmed by the court, usually after a reporting period

Stage 6: Redemption Period

This is where Kentucky differs dramatically from Indiana. Under KRS 426.530, Kentucky provides a right of redemption after the sale:

• If the property sells for less than two-thirds of the appraised value, the homeowner has a 12-month redemption period to buy the property back by paying the sale price plus costs
• If the property sells for two-thirds or more of the appraised value, there is no redemption period
• During the redemption period, the borrower may remain in the home

The total Kentucky foreclosure timeline from first missed payment to completed sale is typically 6 to 14 months, and can stretch even longer with the redemption period.

Indiana vs. Kentucky Foreclosure: Side-by-Side Comparison

Factor	Indiana	Kentucky
Foreclosure Type	Judicial	Judicial
Pre-Filing Wait	120 days (federal)	120 days (federal)
Governing Statute	IC 32-30-10	KRS 426
Response Time	20 days	20 days
Sale Conducted By	County Sheriff	Master Commissioner
Typical Timeline	5-10 months	6-14 months
Redemption Period	None	Up to 12 months (if sale < 2/3 appraised value)
Deficiency Judgment	Allowed	Allowed
Right to Cure Before Sale	Yes, up to sheriff's sale	Yes, up to commissioner's sale
Mediation Required	No (judge's discretion)	No (but some courts offer it)

Your Options at Every Stage of Foreclosure

No matter where you are in the foreclosure timeline, you likely have more options than you think. Here's a breakdown of what's available at each stage, and the pros and cons of each approach.

Option 1: Reinstatement (Catching Up on Payments)

Reinstatement means paying all past-due amounts, late fees, and the lender's legal costs in one lump sum to bring your mortgage current. In both Indiana and Kentucky, you generally have the right to reinstate your loan up until the foreclosure sale.

• Best for: Homeowners who experienced a temporary hardship (medical emergency, job loss) and now have the funds to catch up
• Limitation: You must pay the full past-due amount, not just one payment. By the time legal fees are added, this can be a substantial sum.

Option 2: Forbearance Agreement

A forbearance agreement is an arrangement with your lender to temporarily reduce or pause your mortgage payments. The missed amounts are typically added to the end of your loan or repaid over a set period after the forbearance ends.

• Best for: Homeowners with a temporary income reduction who expect to recover within 3-12 months
• How to apply: Contact your loan servicer directly. Federal law requires them to evaluate you for forbearance options.
• Limitation: Forbearance doesn't erase the debt. You still owe the full amount and must have a plan to resume payments.

Option 3: Loan Modification

A loan modification permanently changes the terms of your mortgage to make it more affordable. This might include a lower interest rate, extended loan term, or even a reduction in principal balance.

• Best for: Homeowners who want to keep their home but can't afford the current payment long-term
• How to apply: Submit a complete loss mitigation application to your servicer, including proof of income, bank statements, and a hardship letter
• Timeline: Modifications can take 30-90 days to process. Under federal rules, if you submit a complete application at least 37 days before a sale, the sale must be postponed.
• Limitation: Not all borrowers qualify. Your income must be sufficient to make the modified payment.

Option 4: Short Sale

A short sale occurs when you sell the property for less than the outstanding mortgage balance, with the lender's approval. The lender agrees to accept the sale proceeds as full or partial satisfaction of the debt.

• Best for: Homeowners who are underwater (owe more than the home is worth) and cannot afford the payments
• Credit impact: A short sale typically impacts your credit less severely than a foreclosure, and many borrowers can qualify for a new mortgage in 2-4 years rather than the 7 years after foreclosure
• Limitation: Requires lender approval, which can take 60-120 days. You may also be responsible for taxes on the forgiven debt (consult a tax professional).

Option 5: Sell to a Cash Buyer

Selling your home to a cash buyer before the foreclosure sale is often the fastest and most practical option, especially if you're running low on time. A reputable cash buyer can close in as little as 7-14 days.

• Best for: Homeowners who need to act quickly, have some equity in the home, or simply want to move on without the credit damage of foreclosure
• Advantages: No repairs needed, no agent commissions, no showings, and a guaranteed closing date. You get cash in hand and can use it to pay off the mortgage and start fresh.
• Timeline: Most cash buyers can make an offer within 24-48 hours and close within 7-14 days
• In both states: You can sell your home right up until the day of the foreclosure sale, as long as you can pay off the mortgage and all associated fees from the sale proceeds

Option 6: Deed in Lieu of Foreclosure

With a deed in lieu, you voluntarily transfer ownership of the property to the lender in exchange for being released from the mortgage debt. The foreclosure process stops because the lender already has the property.

• Best for: Homeowners who have no equity, can't sell the property, and want to avoid the full foreclosure process
• Advantages: Faster resolution, may be reported more favorably on your credit report than a completed foreclosure
• Limitation: Lenders don't always accept a deed in lieu, especially if there are other liens on the property. You may still face tax consequences on forgiven debt.

Option 7: Bankruptcy

Filing for bankruptcy triggers an automatic stay that immediately halts all collection activities, including foreclosure. This is sometimes used as a last resort to buy time.

• Chapter 13 bankruptcy allows you to propose a 3-5 year repayment plan that includes catching up on mortgage arrears while continuing to make current payments. This can permanently stop the foreclosure if you complete the plan.
• Chapter 7 bankruptcy provides a temporary stay but does not offer a mechanism to catch up on mortgage payments. The foreclosure will typically proceed after the stay is lifted.
• Best for: Homeowners who want to keep their home and have enough income to fund a Chapter 13 plan, or those who need time to arrange a sale
• Limitation: Bankruptcy stays on your credit report for 7-10 years and affects your ability to obtain credit. It should not be used solely as a delay tactic.

What Happens After a Foreclosure Sale

In Indiana

Once the sheriff's sale is confirmed by the court, the new owner can begin eviction proceedings if you haven't vacated. You have no right of redemption. If the sale price didn't cover the full mortgage balance plus fees, the lender can pursue a deficiency judgment against you for the remaining amount.

In Kentucky

If you qualify for the 12-month redemption period (sale price was less than two-thirds of appraised value), you can remain in the home during that time. To redeem, you must pay the full sale price plus 10% interest per year and the purchaser's costs. If you don't redeem within the period, you'll need to vacate. Deficiency judgments are also available to lenders in Kentucky.

How a Deficiency Judgment Works

In both states, if your home sells at auction for less than what you owe, the lender can sue you for the difference. For example, if you owe $180,000 and the home sells for $140,000, the lender could seek a $40,000 deficiency judgment.

This is another reason selling before the auction matters. In a private sale, you have more control over the price, and if you negotiate a short sale, you may be able to get the lender to waive the deficiency entirely.

Foreclosure's Impact on Your Credit

A completed foreclosure stays on your credit report for 7 years and can drop your score by 100 to 300 points. This affects your ability to:

• Purchase another home (most lenders require a 3-7 year waiting period after foreclosure)
• Rent an apartment (many landlords check credit)
• Get favorable rates on auto loans, credit cards, and insurance
• Pass employer background checks in some industries

By comparison, selling the home before foreclosure (either as a regular sale or short sale) has a significantly smaller credit impact. A short sale may lower your score by 50 to 150 points, and you could qualify for a new mortgage in as little as 2 years.

Common Myths About Foreclosure

Myth: "I can't sell my house once foreclosure has started."

Reality: You can sell your home at any point before the foreclosure sale. The foreclosure complaint being filed does not prevent you from selling. As long as you can pay off the mortgage from the sale proceeds (or negotiate a short sale with the lender), you can close the sale.

Myth: "The bank wants to take my house."

Reality: Banks lose money on foreclosures. Between legal fees, maintenance, property taxes, and the discounted sale price at auction, lenders typically lose 30-50% of the loan value on a foreclosure. They'd much rather work out an alternative. That's why loss mitigation options exist.

Myth: "If I just ignore it, maybe it will go away."

Reality: Ignoring the foreclosure process is the single most harmful thing you can do. If you don't respond to the complaint, the lender gets a default judgment, and the process accelerates. Every day you wait, you lose options.

Steps to Take Right Now

If you're facing foreclosure in Indiana or Kentucky, here's what to do today:

1. Open every piece of mail from your lender and their attorneys. Ignoring correspondence doesn't stop the process; it just means you miss deadlines.
2. Call your mortgage servicer and ask about loss mitigation options. Document the date, time, and name of everyone you speak with.
3. Contact a HUD-approved housing counselor for free advice. In Indiana, call the Indiana Housing and Community Development Authority (IHCDA). In Kentucky, contact the Kentucky Housing Corporation.
4. Consult a foreclosure attorney if you've been served with a complaint. Many offer free initial consultations.
5. Get a cash offer on your home. Even if you're not sure you want to sell, knowing what your home is worth and what a buyer would pay helps you evaluate all your options.

Don't Let the Timeline Run Out

The foreclosure process in both Indiana and Kentucky gives you more time than you might expect, but that time goes by faster than you think. Courts move forward with or without your participation. Sale dates get set whether you're ready or not.

If you're behind on payments, in pre-foreclosure, or have already received a sale date, the most important thing is to take action now. Every option discussed in this guide becomes harder to pursue the longer you wait, and some disappear entirely once the sale occurs.

At , we work with homeowners throughout Southern Indiana and the Louisville metro area who are facing foreclosure. We can make you a fair cash offer on your home within 24 hours, close on your timeline (as fast as 7 days), and help you walk away with cash in hand instead of a foreclosure on your record.

There are no fees, no commissions, and no obligation. Call us at or fill out our contact form to get a free, no-pressure cash offer today. We've helped dozens of homeowners avoid foreclosure, and we'd like to help you too.