Marshall & Owens has extensive experience in assisting clients with judicial and non-judicial foreclosures. To learn how our attorneys can assist you with each type of foreclosure, click an item below:
Judicial foreclosures are preferred by many foreclosing creditors because of the resulting judgment against the debtor and the finality of the court's order is thought to make title issues more certain. If a creditor believes the debtor has other assets that might satisfy a judgment, this foreclosure is preferable because a creditor can garnish or execute on non-exempt property owed by the debtor following entry of the judgment.
The primary disadvantage of judicial foreclosures is that debtors may file an answer to the complaint and delay judgment. For that reason, the recent trend in Arkansas is to file non-judicial foreclosures, which can, barring bankruptcy, generally be accomplished in less time than a judicial foreclosure. Non-judicial or "statutory" foreclosure is an expedited method which affords few remedies to the mortgagor debtor.
The recent trend in Arkansas foreclosures is toward non-judicial foreclosures. Absent a bankruptcy filing or note requirements that demand more notice than what is typically mandated under Arkansas law, the foreclosure can almost always be completed more quickly than a judicial foreclosure.
Since there is no provision for a debtor to delay the proceedings by filing an answer, a creditor can proceed quickly to the sale and possession of the real estate. Subsequently, by a separate action, a creditor may still pursue a judgment against the debtor for the deficiency if the creditor believes there are other assets from which to collect the judgment.
Since the law requires the creditor to bid two-thirds of the indebtedness at the foreclosure regarding the value of the property, the creditor will not be able to pursue a judgment for more than one-third of the indebtedness. An additional advantage of non-judicial foreclosures is that personal service is not required. Notice is by publication. A negative aspect of non-judicial foreclosures is that there are added advertising costs and trustee fees required by statute.
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