If you are having trouble keeping up on your mortgage payments, you are not alone. Millions of Americans are behind on their mortgages and at risk of getting foreclosed upon. While foreclosure is always a problem in North Carolina, the pandemic and the resulting economic recession have put thousands of families in the state at risk of losing their homes.
If your bank has threatened foreclosure, or if they have already begun to foreclose, you could have several options. One of these is to file for bankruptcy.
Hitting the pause button on foreclosure
When a homeowner in foreclosure files for Chapter 7 or Chapter 13 bankruptcy, the judge issues what is called an Order for Relief. The order automatically puts a stay on foreclosure proceedings. Your home cannot be foreclosed upon until your bankruptcy is finalized, which can take several months. Note that the lender can file a motion to lift the stay, but even if the judge grants the motion, you should still get a couple of extra months to deal with the foreclosure.
This time is valuable because you and your bankruptcy attorney can use it to negotiate a possible settlement with the bank. Depending on the balance on your mortgage and the value of your home, the lender may be willing to amend the terms of your mortgage or allow you to refinance. If keeping the house is not viable, you may be able to work out a deal that gives you a significant portion of the sale proceeds.
Foreclosure and Chapter 13
If you file Chapter 13, you will propose a repayment plan for the past due payments. Keep in mind that you would have to make those payments and keep up on your new mortgage payments at the same time.
Bankruptcy gives you the tools to resolve your debt problems. What you do with those tools is up to you, with the help of your lawyer.