Far too often in a faltering economy, many people face bank foreclosures. There are several reasons for bank foreclosures. Most often the main reasons have to do with some unexpected circumstance such as job loss or unexpected unemployment. Some other reasons people face foreclosures are as follows:

• Sudden illness or a medical emergency
• Divorce
• Death in the family or loss of secondary income
• A job demotion or denial for a promotion
• Adjustable mortgage rate that increases and you are not able to pay the new amount
• Unexpected home repairs

Typically foreclosure involves a lawsuit that a bank, Mortgage Company, or other creditor will seek to take possession of an owner's property to satisfy a debt. The bank or lender can take possession of the property or they can have the sold to pay off the debt. Unfortunately for the owner of the home, they lose whatever rights they may have had with this property.

There are 2 different types of foreclosure, strict foreclosure and foreclosure by sale. Here are the things you need to know about foreclosure, especially if your bank is foreclosing on your home.

Strict Foreclosure - With a strict foreclosure, a judge will set forth a series of "law days" for each person who is listed as a defendant in the foreclosure. After your law day, you will lose all rights to your property. Depending upon the judge, your law day could be 3 weeks to 9 months, or even longer.

You are able to avoid your foreclosure until your law day by redeeming the mortgage. This basically means that you have until your law day to pay off what you owe the bank on your mortgage plus the attorney's fees and court costs. You can redeem the property by selling it, or by borrowing the money from another lender. If you fail to redeem your mortgage by the law date, then other people are given a chance to redeem your mortgage by paying off the debt. If you have another defendant with a law date on your mortgage, that person is entitled to get the legal title to it. Your bank lender will obtain the title to your home is no one else redeems the property.

Foreclosure By Sale - If your bank lender has filed a foreclosure by sale lawsuit, a judge will set a sell date and an attorney who was appointed by the judge will auction off your property to the highest bidder. The attorney is in charge of all the advertising to sell the property. They are also in charge of placing the public notice on the house and the attorney will be responsible for all the legal aspect of the auction. The court will also allow this attorney to enter the property on the date of the sale, but still needs to obtain permission from the owner of the property. If your property goes to auction and it is sold, the money will first be used to pay off the costs of setting up the auction, then to the lender and to any liens that are on your property and lastly, the money will come to you if there is any extra.

You can prevent the auction from happening by paying the amount of the judgment plus any additional costs incurred by the auctioneer prior to the sale date. From here you will still be responsible for paying off the debt by selling the property on your own, or refinancing your mortgage.

If the bank is foreclosing on your mortgage, you have the opportunity to defend yourself in court. Keep in mind that defending yourself against foreclosure is very difficult and very expensive. You may also be responsible for additional legal fees and appraisal fees if you choose to defend yourself. There are a few things you need to prepare if you plan to defend yourself:

• The court summons and complaint. When your bank lender forecloses on your mortgage, you will be served with a summons. In the upper right hand corner of your summons is a return date. You must know the return date in order to know when you need to file paperwork. The complaint you are served will state your bank's position in the case and that they wish to foreclose your mortgage to satisfy a debt that has not been paid.
• File an appearance form. Once you have been served, you need to file an appearance. The appearance is a small form that states you are not ignoring the foreclosure on your home and that you would like to receive notice of everything that is happening in court. If you choose to file an appearance, you should do so within 2 days of the return. If for some reason you miss the due date, contact the court clerk as soon as possible so that you can still be eligible to enter the court contest.
• Unemployed or Underemployed Defendants. You must apply to the court within 25 days of the return date if you think you may qualify for protection due to unemployment or underemployment.
• File an Answer. You will have 15 days after filing the appearance to send an answer to the complaint. Before you send in your answer, you need to carefully read through the complaint. You need to decide if you agree or disagree with what is being said in the complaint. If you do not understand what is being said in the complaint, then you should not agree with it. This is the time you need to include all your defenses to the foreclosure. Be sure you sign the answer and file it at the Court Clerk's office. You must also send a copy of your answer to everyone who has filed an appearance in the court case. At the end of your answer you must include a "certification of service". This is where you certify that you mailed an answer to everyone who has appeared in the court case. If you do not file your answer within the 15 day time period, the court may enter a default and you may not have a chance to present your defense.

•     Decide if you want a strict foreclosure or a foreclosure by sale. You must decide which foreclosure is best for you if you do not have a defense. Most courts will order a strict foreclosure if you do not have a defense, or if you cannot decide which foreclosure is best. If you want a foreclosure by sale, you need to file a Motion for Foreclosure by Sale with the clerk and then send a copy of the motion to all the lawyers who are involved in the lawsuit. A hearing will then by scheduled where you will explain to the judge why you want a foreclosure for sale. Most often the judge will want to know if the property is worth more than the total debt. The total debt will include the mortgage and all the legal costs involved such as the court fees, marshal fees, bank appraisal, the unpaid principle of the loan, the accumulation of interest on the mortgage, advertising costs, and all the costs associated with auctioning off the property, and hiring people to conduct the auction.

You do have some alternative options if your bank is foreclosing on your mortgage. Of course the best option is to pay back all the money you owe as soon as possible. In order to do this you may need to consider selling the property. Contact a realtor as soon as possible and discuss how much you need to sell the house for in order to repay your debt. You can sell your property any time before your law date or the sale date. If you sell the property before the foreclosure goes through, you may save on legal and appraisal costs. You should always consider selling your property instead of letting the bank foreclose on your home.

Another option you have is to seek financial advice. Your bank is required to send you a notice if you miss one payment. If you fail to make your mortgage payment because you were involuntarily unemployed, then the lender must provide you with financial counseling. The Department of Housing and Urban Development will provide you with a listing of financial consultants in your area.

There is also an emergency mortgage assistance program that is available in some states. Most emergency mortgage assistance programs will look at your income and determine if you have had a significant loss of income that was beyond your control and whether there is a chance that you will be able to resume your normal mortgage payments in the future. Many of these companies will also provide assistance for refinancing if the property value significantly dropped since the mortgage was first taken out.

As a last resort, you can prevent a foreclosure by declaring bankruptcy. You should always ask for the advice of your attorney if you are considering bankruptcy, as this can by financially damaging to you for years to come.