Today’s post is a brief vocabulary lesson. In the event you are involved in an Indiana’s sheriff’s sale, it’s likely that you’ll hear the terminology “credit bid” as you prepare for the sale. What’s it mean? The Indiana Court of Appeals in R.P. Leasing v Chemical Bank, 47 N.E.3d 1211 (Ind. Ct. App. 2015) tells us:
A “credit bid” refers to a situation in which a judgment creditor (e.g. a bank holding the mortgage) is the purchaser at its own foreclosure sale and bids the judgment instead of cash. Such a bid is as effective as payment in actual money would have been, and the amount of the judgment must be reduced by the amount of the credit bid.
A credit bid is the same thing as a “judgment bid,” and we use those terms interchangeably. This is because the party holding the judgment can bid up to the full amount of the judgment without depositing cash with the sheriff. Judgments are like prepaid debit cards. You can buy the real estate cash-free. Unless the judgment creditor intends to bid more than the amount of the judgment, the judgment creditor, unlike a third-party bidder, is not required to bring cash to the sale.
For more on this subject, please see these posts:
- An Indiana Deficiency Judgment Arises Out Of The Foreclosure Judgment Itself, Not A Separate Action
- Sheriff’s Sale Credit Bid: Ensure Post-Judgment Damages Are Readily Ascertainable And Undisputed
- Full Credit (Judgment) Bid in Michigan Extinguishes Debt and Mortgage in Indiana
- Full Judgment Bid = Zero Deficiency
- How Much Should A Lender/Senior Mortgagee Bid At An Indiana Sheriff’s Sale?
My practice includes representing judgment creditors, judgment debtors and third-party bidders in connection with sheriff’s sales. If you need assistance with such matters, please call me at 317-639-6151 or email me at [email protected]. Also, you can receive my blog posts on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.