Can You Avoid a Foreclosure?
If you are behind on your home mortgage payments in North Carolina, you are at risk of losing your home through foreclosure. Before that happens, schedule a consultation with a compassionate attorney for real estate financial troubles to discuss your legal options for avoiding foreclosure.
What is the role of a bankruptcy attorney in a foreclosure proceeding in this state? If you are behind on mortgage payments, are bankruptcy and foreclosure your only options? When should you call a trusted legal counsel for foreclosure defense, and what will that attorney do on your behalf?
If you will continue to read this short discussion of foreclosure, bankruptcy, and bankruptcy attorneys in North Carolina, you will learn the answers to these questions – answers that anyone who is making mortgage payments in North Carolina needs to know.
How Does a Foreclosure Begin?
Historically, the state and federal laws that regulate mortgage lenders and foreclosures lean toward favoring lenders, but over time, the law has imposed stricter regulations on lenders and has provided more protection to borrowers.
Now, under federal law, a lender cannot begin the foreclosure process until the borrower is 120 days behind on payments. (There are several narrow exceptions). This gives most borrowers enough time to apply to the lender for a loss mitigation agreement – or to file for bankruptcy.
Prior to initiating a foreclosure, most North Carolina mortgage lenders are also required to send borrowers a “breach letter” which informs a borrower that the loan is in default and gives that borrower the opportunity to cure the default and avoid a foreclosure.
What Does Loss Mitigation Entail?
“Loss mitigation” is the general term for the options that a mortgage lender may offer a borrower as alternatives to foreclosure. Like borrowers, lenders also prefer to avoid foreclosures, so a lender may provide these options:
- a deed in lieu of foreclosure
- a forbearance agreement
- a mortgage modification revising the conditions and terms of the loan
- a repayment plan
- a short sale
What Are a Lender’s Notification Requirements?
A mortgage lender must contact you (or try to) over the phone about loss mitigation within 36 days of a missed payment and then within 36 days of each subsequent missed payment. Within 45 days of a missed payment, a lender must advise you about loss mitigation in a breach letter.
That breach letter must specify the amount past due and any other charges that must be paid to bring the loan current. The breach letter also must include contact information for the mortgage lender or a lender’s agent who is authorized to work with the borrower on loss mitigation.
Federal law allows several exceptions to these notification requirements – for example if you have filed for bankruptcy or if you have asked the lender not to contact you under the provisions of the Fair Debt Collection Practices Act.
What Are “Judicial” Foreclosures?
Lenders in North Carolina may foreclose using either the judicial or non-judicial method. In a judicial foreclosure, the lender files a lawsuit against the borrower and asks the court to allow a foreclosure sale, and if the borrower does not respond in writing, that request will be approved.
If you want to challenge the lawsuit, you will need to contact – promptly – a North Carolina bankruptcy lawyer who may offer one or more of these defenses on your behalf:
- The lender did not follow the procedures for foreclosure as required by law.
- The lender cannot prove that it owns the loan.
- You are in the military on active duty, so federal law gives you foreclosure protection.
- You are a victim of unfair or predatory lending practices.
- You are not in arrears on the mortgage payment.
What Are “Non-Judicial” Foreclosures?
In North Carolina, most home foreclosures are “non-judicial,” but even a non-judicial foreclosure requires a brief court hearing. Most lenders use the non-judicial foreclosure method in this state because it is faster and less costly than bringing a lawsuit.
The lender begins a non-judicial foreclosure when it files a notice of hearing with the clerk of the court and when a notice of hearing is served to the borrower (ten to twenty days prior to the hearing). The hearing determines if:
- The debt is valid and the borrower is in fact in default.
- The lender is in fact the owner of the debt, and the borrower was properly notified.
- A foreclosure is permitted by the deed of trust.
If the home is the borrower’s primary residence and if the clerk believes that the delinquency can be resolved within sixty days without a foreclosure, the clerk of the court may delay the hearing for up to sixty days. However, if no delay is warranted, the clerk will approve a foreclosure sale.
How Will a Bankruptcy Lawyer Help You?
To ensure that there are no mistakes or misunderstandings, have an attorney’s help when you prepare the loss mitigation paperwork or negotiate with the lender. If you don’t think loss mitigation will help, obtain a North Carolina bankruptcy attorney’s advice and services at the earliest possible opportunity.
You will also need a bankruptcy lawyer’s help if the lender or lender’s agent does not act in good faith, doesn’t respond to you, or denies your application for loss mitigation. The right bankruptcy attorney can make the difference between keeping your home or losing your home to foreclosure.
When Bankruptcy is Your Best Option
Although it’s genuinely a last resort that entails some negative consequences for your credit, if you and your lawyer decide that bankruptcy is the best way for you to avoid a foreclosure, that lawyer will prepare the legal documents and guide you through the bankruptcy process.
After your paperwork is filed, the bankruptcy court issues an automatic stay that halts the foreclosure process. Filing for a Chapter 7 bankruptcy may delay a foreclosure for some months, although if you want to keep the home, a Chapter 13 bankruptcy is the better option.
But how can you select the right foreclosure or bankruptcy attorney – someone you can trust to protect your best interests and get the job done right?
Contact the Team at Gillespie & Murphy
If foreclosure on your home is imminent, or if you’re swamped with debts that you can’t repay, the award-winning attorneys at Gillespie & Murphy will explain your options, protect your rights, and negotiate with your mortgage lender or represent you in a bankruptcy proceeding.
You cannot make the right choices about foreclosure or bankruptcy without the reliable advice that an experienced and knowledgeable bankruptcy attorney can offer you. The more information and knowledge you have the best decision you can make concerning your home and the foreclosure process. When you become our client at Gillespie & Murphy, you will be treated with the respect and dignity you deserve. There is hope, there is a solution.
The offices of Gillespie & Murphy are located in Greenville, Jacksonville, Wilmington, and New Bern. If your home and family are threatened with a foreclosure, schedule a no-obligation, free legal consultation with Gillespie & Murphy now by calling us at 252-636-2225.