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One of the common reasons clients first contact us is to prevent or forestall a foreclosure on their home. Some mortgage companies will let you slide on several months of payments before they pursue a foreclosure to take back the property. Still other financing firms are much more aggressive and will act after just a couple of months missed. When you miss a house payment, your lender will typically send out a dunning letter telling you that you need to send in the payment ASAP or face foreclosure and sale of your property.
A letter of this manner is NOT an official notice that your house is being foreclosed on. These can be scary to get but they don’t mean your house is going up for auction (at least not yet). But if you don’t catch up on your payments, you may receive a more serious notification that you shouldn’t ignore. Your lender is required to give you notice that they intend to carry out the foreclosure. Letters like these are what often sends people into a panic and has them calling us looking for a solution. The good news is that we can help!
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The 45 day window
North Carolina law requires that your lender issue a pre-foreclosure notice for a primary residence at least 45 days prior to a hearing on the matter. The notice must contain the following information:
- Itemization of all past due amounts
- Itemization of what must be paid to bring it current
- Statement of what options you may have other than foreclosure (including foreclosure avoidance programs, loan modification programs or Housing and Urban Development programs)
- Detailed contact information for your loan servicer
- Detailed contact information for HUD-approved counseling agencies in North Carolina that are assigned to help North Carolina borrowers to avoid foreclosure
- Detailed contact information for the NC State Home Foreclosure Prevention Project of the Housing Finance Agency
The foreclosure hearing
The foreclosure hearing is held before a Clerk of the Court rather than a judge or full court hearing. A representative for your mortgage holder will present information that shows that you are behind on your payments and that according to the terms of your mortgage, that they are entitled to foreclose on the property to satisfy the debt owed to them. Once they get approval, they advertise the sale and then hold the auction. Usually it is the lender themselves that buy the property.
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Timing bankruptcy to prevent foreclosure
In order to prevent foreclosure, you should contact a reputable North Carolina bankruptcy attorney before it’s too late. Chapter 13 bankruptcy can interrupt and stop this process at any point from the time you get the notification letter up until 10 days after the foreclosure sale takes place. So the question is: when is the best time for you to file to make sure you keep your home?
Here are some things to consider:
- Foreclosure costs – It costs money for your lender to put your property through the foreclosure. They have to hire attorneys to do the paperwork and then there are court costs to consider. If it gets to the point that they actually file for foreclosure, they will want you to pay these costs. To avoid this, filing after you get the threat letter, but before they take legal action will save you some money in the long run.
- Payment arrears – Your lender will insist on collecting the missed mortgage payments (one way or another) to rehabilitate your loan to avoid foreclosure. There are different ways this can be accomplished, but the longer you allow missed payments to accumulate, the greater the arrearage will be. This is another reason not to let this situation linger and to consider filing bankruptcy sooner to clear up the matter.
In short, when clients come see us about avoiding foreclosure with a Chapter 13, we advise that filing earlier is best. This will give you peace of mind that you won’t lose your home and hope that you can regain your financial footing and put your money woes behind you! To find out more about keeping your North Carolina home out of foreclosure, contact the law offices of John T Orcutt for a free consultation about your debt dilemma.