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This content was last updated on 2/13/2024

What is foreclosure?

Foreclosure is a process that begins when a homeowner who has borrowed money to buy a house fails to make their mortgage payments.  The bank or mortgage company can take back a home to satisfy the mortgage debt.

Kentucky is a judicial foreclosure state, meaning that most, if not all, foreclosures go through the courts.    If you miss just one mortgage payment, you are considered to be in default on your loan.  The time for a foreclosure in Kentucky varies from county to county, but loan servicers usually wait 120 days after the homeowner fails to make mortgage payments before starting foreclosure proceedings.

What do the terms “mortgage” and “note” and “default” mean?

A mortgage is an agreement that says the entity that lent you money (the lender) to buy your house can use the house as collateral for a debt, which means if you do not pay the debt, the lender can bring a foreclosure case in court so that the property can be sold to satisfy the debt.

When you sign your mortgage, you also sign a document called a note. The mortgage note is like an IOU. The note spells out the amount of money you borrowed and the terms for repayment, such as the interest rate and length of the loan.

A loan default occurs when you fail to do what the mortgage note requires. For example, a homeowner who misses a mortgage payment is in default.

Who are the different parties that could be involved if I get behind on my mortgage payments?
  • Mortgage Holder: The mortgage holder has the right to foreclose on your house if you do not make your payments. The mortgage holder can be a bank, a company, a trust, or a person that owns the mortgage.
  • Noteholder: The noteholder is the company that owns the right to collect your payments.
  • Servicer: The company that sends you notices and bills is usually called the “Servicer” for the mortgage holder. The mortgage holder hires a servicer to collect payments, process loan modifications and communicate with you about the loan.

The mortgage holder, noteholder and servicer can all be the same company or all different companies. 

How does the foreclosure process work?

Kentucky is a judicial foreclosure state, which means that foreclosure cases go through the court system and the lender must file a lawsuit to foreclose on the property. The court will attempt to determine the circumstances surrounding the default through in-court hearings and documents filed by the homeowner and lender. The homeowner will also have the opportunity to try to negotiate a way to avoid losing avoid foreclosure. If the court determines that the foreclosure is proper, and the homeowner isn't successful in the negotiations to stop the foreclosure, the court will enter a judgment against the homeowner and a foreclosure sale will follow.

What should I do if I get behind on my mortgage payments?

Don’t ignore that you are behind on your payments.   The further behind you get, the harder it will be to reinstate your loan and the more likely it is that you will lose your house.

The best thing to do is to contact a certified housing counselor or lawyer. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender, if you need this assistance.  To find approved housing counselors near you,  got to:  Or you can call (800) 569-4287 or TTY (800) 877-8339.

You can also contact your local legal aid program for help:

Here are some other things that you should do:

Contact your lender or servicer as soon as you realize that you have a problem.

Lenders do not want your house. They have options to help homeowners through hard financial times. 

Open and respond to all mail from your lender.

The first notices you receive will offer good information about foreclosure prevention options that can help you. Later mail may include important notices of pending legal action. Your failure to open the mail will not be an excuse if you are sued in court for foreclosure.

Know your mortgage rights.

Find your loan documents (mortgage and note) and read them so you know what your lender may do if you can't make your payments.

Understand what options you have to deal with foreclosure.

For good information about  foreclosure prevention (also called loss mitigation) options go here:

Contact the Kentucky Homeownership Protection Center.

You can reach them at

Look at your household budget & pay the most critical expenses first.

After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses, such as cable, memberships, entertainment, that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.

Use your assets.

Assets can be things like a second car that has been paid off or jewelry.  If you sell them, you could use the cash to help reinstate your loan.  Consider getting an extra job to bring in additional income. Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.

Avoid foreclosure prevention companies.

Don’t pay fees for foreclosure prevention help - use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services that your lender or a HUD-approved housing counselor will provide for free.

Don't lose your house to foreclosure recovery scams.

If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional or a HUD-approved housing counselor.

Are there agencies that can help me find funds to catch up on my payments?

Yes.  In Kentucky, you should contact the Kentucky Homeownership Protection Center at

What happens if the court foreclosure goes through?

The court will enter a judgement of foreclosure, say how much you as the homeowner owe the lender and give you a short time to pay the full amount.  If you don’t pay within that time, the property will be sold by an officer of the court.

At some point prior to the scheduled date of the sale, an appraisal of the property will be done.  If the foreclosure sale price is less than two-thirds of the appraised value, you as the homeowner have 6 months from the date of the sale to redeem (buy back) your home by paying the amount the property was sold for, plus interest.

It is possible that a deficiency judgment will be entered against you or the difference between the amount you owed on the original loan and the foreclosure sale price, but only if you were properly notified about the court action.

Can I save my home by filing bankruptcy?

A Chapter 13 bankruptcy can allow you to catch up on your mortgage over a three-to five-year period while you make your regular monthly mortgage payments. Either a Chapter 13 bankruptcy or a Chapter 7 bankruptcy can help you get rid of lower-priority debts so that you can focus on your mortgage and other essential bills.  

For more information about bankruptcy, go here:

After my house is sold, how soon do I have to move out?

Under Kentucky law, the new owner from the foreclosure sale gets the right to possess the property after giving you a 10 days’ notice in writing.  If you are still in the house after 10 days, the new owner can get a writ of possession from the court and the sheriff can set you and your things out of the house.


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