Are you being threatened with foreclosure?
Image Source: Flickr User Taylor S
When you struggle with your finances, many bad things can happen. And when it comes to your mortgage and all of the other issues attached, it can mean the loss of your home. Not only does your mortgage contract require you to make timely payments on your mortgage itself, but also to keep up with property taxes and homeowner's insurance. Even if you're current on your mortgage, if you lapse on the other responsibilities, you can find yourself in trouble and facing foreclosure.
Yes, you can be current on mortgage and foreclosed
There are a couple of ways this can happen. In the terms and conditions of your mortgage contract, in addition to being responsible for paying your mortgage installments, you also are on the hook for other responsibilities. In most contracts, you will also find that you must also stay current on your homeowner's insurance, homeowner's association dues and property taxes. If you do not, the mortgage holder may be able to call in your note (i.e. demand immediate payment in full of all debt). And if you don't correct the situation, they can press on to a foreclosure.
Yes, your taxes can be piled onto your mortgage
If your property taxes fall behind, or your homeowner's insurance lapses, the mortgage company will know. As a lien holder on the property, they will be notified in either of these circumstances. The mortgage holder will usually demand that you correct the situation and, if you don't, will usually pay the debt on your behalf and then tack the amount onto your mortgage. This will then feed into more fines, interest and penalties that can make these amounts even costlier. And if you don't pay the mortgage company back, they can foreclose even if your mortgage payments are current.
Yes, your past-due HOA fees can also cause a foreclosure
Homeowner's associations are notoriously aggressive when it comes to past-due balances. If your HOA has written into the Covenants, Conditions and Restrictions (CC&R) that it can place a lien and foreclose on your if you fall behind, they often will take this drastic step. But what will often happen in this case is that your mortgage company will pay off the HOA to stop the foreclosure. Why? The HOA's foreclosure can conflict with the mortgage debt and could, in some case, eliminate it. That would leave the HOA with the house and the mortgage holder empty-handed.
How bankruptcy helps relieve these issues
If you are behind on your mortgage payments, as well as these associated expenses and have equity, you likely want to try and save your home. A Chapter 13 bankruptcy can give you the time you need to catch up on all of these. How it works is you pay your current mortgage payment and monthly homeowner's insurance, then the past due balances on all of these are put into a lump and you pay a little bit each month toward that back balance. At the end of three to five years, depending on the terms of your repayment, you'll be current on everything.
However, if you are upside down on your mortgage (meaning you owe more than the property is worth), you may want to give up the home and all of the related debt and have a fresh start – Chapter 7 can help with this. Alternately, if you are current on your mortgage payments but have a pile of other past due debt, Chapter 7 can help. Chapter 7 wipes out unsecured debt like credit cards and medical bills. And if you give up your home before or as part of your Chapter 7, the mortgage, property taxes and HOA fees can all be wiped out along with it. This gives you a clean break.
To find out more about how to use North Carolina bankruptcy to get caught up on mortgage-related expenses and get debt-free, contact the Law Offices of John T Orcutt today. Call +1-919-646-2654 for a free consultation in Raleigh, Greensboro, Raleigh, Fayetteville, Durham, Wilson or Garner.