Forced sale is a court-ordered sale of property to settle an outstanding debt, typically after all reasonable efforts to work with the debtor have been exhausted. The process is time-consuming and expensive, and creditors tend to try every possible approach before filing a lawsuit.
Also known as a sheriff’s sale, a forced sale is a court-ordered sale of property to settle an outstanding debt. The sale is forced, because the owner of the property is involuntarily selling his property. Typically, such a sale does not happen until all reasonable efforts to work with the debtor have been exhausted and the creditor has chosen to pursue legal action.
A forced sale of property can take place as a means to settle any type of debt. One of the most common reasons for this type of court-ordered sale is because a debtor defaults on a mortgage. Assuming the debtor has no other assets which may be required to pay the debt, the property sold under the jurisdiction of the court, with the proceeds of the sale forwarded to the mortgage lender.
In many countries, landlords can also seek compensation in court for non-payment of rent on residential or commercial property. If there is no other way to obtain the necessary funds from the debtor, a judge may order that the individual’s assets, including vehicles or furnishings, be confiscated by local law enforcement authorities and sold at a public auction. The proceeds of the sale are offered to the lessor, after the court costs have been fully paid.
It is important to note that in most jurisdictions, the process of obtaining a judgment and holding a forced sale of real estate is a lengthy process. Often, the plaintiff must be able to demonstrate that all reasonable efforts have been made to work out a payment plan with the defendant. Again, the process leading up to a forced sale could take several months before a decision is made, then even longer before the sale actually takes place. This is especially true when the assets in question are anything other than real estate.
The legal procedures that must be followed to obtain a judgment and receive instructions from a judge to plan a forced sale are not only time consuming, but can also be quite expensive. For this reason, lenders tend to try every possible approach before filing a lawsuit against a debtor. Likewise, a landlord will often try to find a way to resolve the matter amicably without the need to go to court. If the creditor or landlord believes that the cost of litigation would ultimately prove to be greater than the original debt, it is not unusual for the matter to be transferred for collections rather than go through the effort of obtaining a judgment and forcing the sale of the property or other goods.
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