Concord, NC asked in Foreclosure for North Carolina

Q: Should i go through bankruptcy, foreclosure or deed in lieu of. i have run out of funds to make mortgage payments.

Do i need a lawyer before signing any paperwork or verbally agreeing to anything over the phone.

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2 Lawyer Answers
Answered
  • Consumer Law Lawyer
  • Cary, NC
  • Licenced in North Carolina

A: The answer is it depends on a lot of details which you don't relate.

Do you have only one mortgage on your property? Is your home underwater or do you have some equity? If you have more than one mortgage, then you cannot do a deed in lieu of foreclosure.

What kind of bankruptcy are you interested in filing? Do you have at least $10,000 in dischargeable debt? Why are you behind? Will you ever be able to get caught up? If you want to save your home, you either have to figure out how to get current if you want to file a chapter 7 bankruptcy or you can file a chapter 13 which will allow you to get caught up on the amount you are behind over a 3-5 year period. If you had an interruption in income and will be able to resume monthly payments but need some help getting caught up, this may be an option. If you lost your job and will never be able to resume payments, then maybe you will need to consider bankruptcy at some point, but I would not file now unless you have other pressing dischargeable debt.

If you have run out of money, have no way to pay the mortgage - have you sought help from the NC Housing Finance Agency? They have a mortgage payment assistance program for those who qualify - if you lost your job through no fault of your own and need help to either get retrained or look for work, then you may qualify. Talk to a housing counselor at a non-profit if this might be you.

If that does not work, then stay in your home as long as you can. Where else can you live rent free? Start saving funds as you will need them as you will have to move at some point. From the time you stop paying, foreclosure proceedings will start in about 4-6 months. The foreclosure sale is held about 60 days after the hearing. Foreclosure in NC is non-judicial. If its your mortgage and is in default, then the foreclosure will go through. If you have any other defenses (like fraud, or the mortgage has been sold) then those have to be brought in a separate legal action. Any foreclosure will not be stayed unless you filed a separate document to do that. After the sale, you will have to get out. If the bank buys back your house, then some lenders offer a "cash for keys" incentive and if you leave the home in good condition, the bank will pay you money. Its a win for everyone.

If the mortgage is your only debt, then I would not file bankruptcy unless and until the mortgage company pursues you for a deficiency. They have only 1 year to do that and whether they will or not depends on your circumstances and what other assets you own.

If you have more than one mortgage, foreclosure wipes out any junior mortgages. However, there still exists the mortgage note and second lienholders can and will sue. The deficiency laws don't apply there. If this is your situation and you get sued, then that would be another instance where you should think about bankruptcy.

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Answered
  • Consumer Law Lawyer
  • Cary, NC
  • Licenced in North Carolina

A: PS - do you need a lawyer? Do you have to ask? No one "needs" a lawyer. If there are documents that you are receiving, like a deed-in-lieu, then you may want to consult with a lawyer and pay the lawyer to review for you. Likewise, if you are served with a foreclosure complaint, then you should consult a foreclosure defense lawyer to see if you have any viable defenses.

There is no verbal agreements. Any arrangements come with paperwork.

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