As an attorney practicing bankruptcy law in Asheville, NC, I frequently sit down with folks who have for one reason or another fallen behind on their mortgage payments. They are wondering about when the mortgage company can foreclose, and what that process entails.
First Mortgage Default
After falling behind about 3-4 months on your first mortgage payment, people in North Carolina can expect to receive a notice of foreclosure. This document informs you that the bank has begun the foreclosure process. A foreclosure hearing date can be scheduled at least 30 days from this notice (usually 45 days is given), but not before. There must be a minimum, under North Carolina law, of 20 days from the hearing date to the foreclosure sale date. After the sale date, there is a 10 day upset bid period before the foreclosure is finalized and the property no longer belongs to you. The bottom line is that if you have received a notice of foreclosure, it would be wise to meet with a professional to discuss your best options, and you still have time to do so.
Second Mortgage Default
If you have defaulted on your second mortgage, the bank may choose not to foreclose at all. The key is to determine whether there is any equity for the second mortgage holder after determining the value of the home and deducting both the amount of your first mortgage and the costs of foreclosure. If equity remains, the second mortgage bank may seek foreclosure under the same time frame listed above. If not, they will probably sell their debt to a collection company who will try to pursue payment as if it were an unsecured credit card debt.
What Should I Do Next?
Getting good advice is essential when you have fallen behind on any bills, but particularly your mortgage. Many times eliminating credit card debts in a Chapter 7 bankruptcy case can free up money to catch-up on the mortgage payment. A Chapter 13 bankruptcy case can buy more time to catch up on mortgage payments, and the mortgage company is forced to accept the bankruptcy code’s terms. Sometimes, better and more affordable housing alternatives exist so a client needs to eliminate the mortgage liability to achieve their fresh start.
The possibilities are endless, and it only takes a few minutes to become informed. For those of you in Western North Carolina, I would be pleased to explain your choices during a free initial bankruptcy consultation.
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