Kentucky Foreclosure Laws and Procedures

Prior to the foreclosure crisis, federal and state regulations governing mortgage servicers and foreclosure processes were limited and often favored lenders. Today, however, laws at both the federal and state levels offer important protections for borrowers. Mortgage servicers are now generally required to provide loss mitigation options, document each step of the foreclosure process, and strictly adhere to all applicable foreclosure laws.

In Kentucky, most homebuyers sign a promissory note and mortgage when purchasing residential property. These documents grant homeowners specific contractual rights, even if they fall behind on their mortgage payments.

Don't get caught off guard if you're struggling to make your mortgage payments. Understanding Kentucky's foreclosure laws and the Kentucky foreclosure process (from your first missed payment to a potential foreclosure sale) can help you protect your rights and make informed decisions.

Your Legal Rights During Foreclosure in Kentucky

In a Kentucky foreclosure, you'll most likely get the right to:

• receive a preforeclosure notice, called a "breach letter"
• apply for loss mitigation
• get notice of the foreclosure and the chance to respond in court
• get current on the loan and stop the foreclosure sale
• receive special protections if you're in the military (the Servicemembers Civil Relief Act provides legal protections to military personnel facing foreclosure)
• pay off the loan to prevent a sale
• in some cases, redeem the property after the sale
• file for bankruptcy, and
• get any excess money after a foreclosure sale.

Once you understand the Kentucky foreclosure process and your rights, you can make the most of your situation and, hopefully, work out a way to save your home or at least get through the process with as little anxiety as possible.

What Happens If You Miss a Mortgage Payment in Kentucky?

The period after you fall behind in payments, but before a foreclosure officially starts, is generally called the "preforeclosure" stage. (Sometimes, people refer to the period before a foreclosure sale happens as "preforeclosure," too.)

During the preforeclosure period, the servicer can charge you various fees. Also, in most cases, federal law requires the servicer to let you know how to avoid foreclosure, and most mortgage contracts require the servicer to send you a breach letter.

When Can a Lender Start Foreclosure in Kentucky?

Under federal law, the servicer usually can't officially begin a foreclosure until you're more than 120 days past due on payments, subject to a few exceptions. (12 C.F.R. § 1024.41 (2025).) This 120-day period provides most homeowners ample opportunity to submit a loss mitigation application to the servicer.

For more information on federal mortgage servicing laws and foreclosure relief options, go to the Consumer Financial Protection Bureau (CFPB) website.

What Is the Kentucky Foreclosure Process?

If you default on your mortgage payments for your home in Kentucky, the foreclosure will be judicial.

Guide to the Judicial Foreclosure Process in Kentucky

A judicial foreclosure begins when the lender files a lawsuit asking a court for an order allowing a foreclosure sale. The lender gives notice of the suit by serving you a summons and complaint. You generally get 20 days after service to file an answer. (Ky. R. Civ. P. 4.02 (2025).)

If you don't respond to the suit, the lender will ask the court for, and probably receive, a default judgment, allowing it to hold a foreclosure sale. (The court might send the matter to the master commissioner, a court-appointed official, for a foreclosure recommendation. If the judge agrees with the recommendation, the lender gets a default judgment and wins the case.)

But if you choose to defend the foreclosure lawsuit, the case will go through the litigation process. The lender might then ask the court to grant summary judgment. A summary judgment motion asks that the court grant judgment in favor of the lender because there's no dispute about the critical aspects of the case. Again, the commissioner might review the motion. If the commissioner recommends that the court should grant the motion, and the court agrees, the court will enter a judgment for the lender.

The commissioner will then administer the foreclosure sale by preparing a notice of sale that is typically posted at or near the property and published in a newspaper. Two appraisers will perform a drive-by inspection of the property. (Ky. Rev. Stat. § 426.200, § 424.130, § 426.560 (2025).)

How Do Foreclosure Sales in Kentucky Work?

At the sale, the lender usually makes a credit bid. The lender can bid up to the total amount owed, including fees and costs, or it may bid less. In some states, including Kentucky, when the lender is the high bidder at the sale but bids less than the total debt, it can get a deficiency judgment against the borrower. The property becomes "real estate owned" (REO) if the lender is the highest bidder.

But if a bidder, say a third party, is the highest bidder and offers more than you owe, and the sale results in excess proceeds (that is, money over and above what's needed to pay off all the liens on your property) you're entitled to that surplus money.

After Foreclosure in Kentucky: How Long Until You Must Move Out?

Under Kentucky law, the new owner from the foreclosure sale gets the right to possess the property after giving the former owner ten days' notice. Then, the purchaser can get a writ of possession from the court. (Ky. Rev. Stat. § 426.260 (2025).)

Options to Stop Foreclosure in Kentucky and Save Your Home

A few potential ways to stop a foreclosure and keep your home include reinstating the loan, redeeming the property before or after the sale, or filing for bankruptcy. Working out a loss mitigation option, like a loan modification, will also stop a foreclosure.

Or you might be able to work out a short sale or deed in lieu of foreclosure and avoid foreclosure. But you'll have to give up your home with a short sale or deed in lieu of foreclosure transaction.

Reinstating the Loan

Kentucky law doesn't provide a statutory right to reinstate the loan before the sale unless the loan is a high-cost home loan. Before filing a complaint to foreclose a high-cost home loan, the lender has to provide a notice of default to the borrower that gives 30 days to cure the default and reinstate the mortgage. (Ky. Rev. Stat. § 360.100 (2025).)

However, many mortgages, like the uniform Fannie Mae/Freddie Mac mortgage, give the borrower the right to cure the default after acceleration and reinstate the loan. Check your loan documents to determine if you get a reinstatement right and, if so, the deadline to complete one. Or your lender might agree to let you reinstate the loan.

What Is the Right of Redemption in a Foreclosure in Kentucky?

One way to stop a foreclosure is by "redeeming" the property. To redeem, you have to pay off the full amount of the loan before the foreclosure sale.

Some states also provide foreclosed borrowers a redemption period after the foreclosure sale, during which they can buy back the home. Under Kentucky law, if the home sells for less than two-thirds of the appraised value, the redemption period is six months after the sale. (Ky. Rev. Stat. § 426.530 (2025).)

Filing for Bankruptcy

If you're facing a foreclosure, filing for bankruptcy might help. In fact, if a foreclosure sale is scheduled to occur in the next day or so, the best way to stop the sale immediately is by filing for bankruptcy.

Once you file for bankruptcy, something called an "automatic stay" happens. The stay functions as an injunction prohibiting the lender from foreclosing on your home or trying to collect its debt, at least temporarily.

In many cases, filing for Chapter 7 bankruptcy can delay the foreclosure by a matter of months. But if you're behind in payments and can't catch up, you'll probably have to give up the home. If you want to save your home, filing for Chapter 13 bankruptcy can provide a way to catch up on delinquent payments. To find out the options available, speak with a local bankruptcy attorney.

Deficiency Judgments in Kentucky

In a foreclosure, the borrower's total mortgage debt frequently exceeds the foreclosure sale price. The difference between the total debt and the sale price is called a "deficiency." For example, say the total debt owed is $450,000, but the home sells for $400,000 at the foreclosure sale. The deficiency is $50,000.

Some states permit the lender to seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount (in our example, $50,000) from the borrower.

In Kentucky, the lender may generally get a judgment for the deficiency. (Ky. Rev. Stat. § 426.005 (2025).)

Getting Foreclosure Help in Kentucky

If you have questions about Kentucky's foreclosure process or want to learn about potential defenses to a foreclosure and possibly fight the foreclosure in court, consider talking to a foreclosure attorney. If you can't afford an attorney, the Kentucky Homeownership Protection Center provides free counseling, foreclosure prevention advice, and referrals to legal aid. Visit protectmykyhome.org or call 866-830-7868.