The pain and fear of a possible foreclosure can make it difficult to decide where to begin. What is your goal? Do you want to keep your home, or do you want out from under your mortgage? This will depend on your personal situation: your family and your local financial prospects.

Consulting a foreclosure attorney can help you understand your options as a North Carolina homeowner—you may have more than you think.

Your Foreclosure Warnings and Notice

Although it can differ based on your lender and your circumstances, federal and state laws provide a timeline for the foreclosure process—

  • 36 days after any missed payment: Federal law requires the servicer to make live contact with you to discuss any possible loan mitigation options.
  • 45 days delinquent: The servicer must send a letter advising you of any loss mitigation options they offer and assigning personnel to your case.
  • 120 days delinquent: In most cases, a lender cannot begin the foreclosure process until this point. 12 CFR § 1024.41. Typical NC foreclosures are nonjudicial and start with a notice of hearing filed by the lender.
  • 45 days before the notice of hearing: The servicer must send a letter advising you of your total itemized debt and other information regarding your options outside of foreclosure. See NC Gen. Stat. § 45‑102.
  • 10 days before the hearing date: You must be served with the notice of hearing. If service by publication is authorized, 20 days are permitted instead. See § 45‑21.16.

Once you take stock of your financial situation and prospects, you must decide what is most important to you and your family. You may be able to retain your home with some sacrifice; you may prefer to sell and move on. It’s best to make these decisions together with a trusted advisor who can inform you of your options under North Carolina law.

Saving the Home

If you want to remain in your home, you have two primary options—a successful loss mitigation arrangement or a declaration of bankruptcy.

Loss Mitigation

Making a payment arrangement with lenders is the first hope for those struggling with mortgage payments. Typical arrangements include:

  • A forbearance period for those in exceptional circumstances, such as COVID-19-related difficulties
  • Modifications to the mortgage, such as extending the payment period and adding the delinquent amounts to the original loan
  • Partial claim—a second lien for the amount in arrears, placed on the property and payable at time of sale
  • Refinancing by obtaining another loan to pay off the delinquent amounts 
  • Government-sponsored modification assistance for certain borrowers, including those with FHA loans and military service members

However, your modification options are limited by the discretion of the lender or the terms set by the government. You will need to demonstrate financial hardship in your application. Finally, you must be able to adhere to the terms of your new agreement. Working closely with an NC foreclosure advisor can help you understand whether your modification prospects have a good chance of success.

Bankruptcy: What Can It Do for You?

Once you declare bankruptcy, almost all your creditors must halt their debt collection procedures, including foreclosure. When you reside in NC, you qualify for a homestead exemption—a certain amount of real estate that creditors cannot seize. This value amounts to:

  • $35,000 for a single person under 65
  • $60,000 for a single person over 65 if they are the widow/er of a deceased joint owner of the property
  • $70,000 for a married couple filing joint bankruptcy when they are both owners of the property
  • Tenants By Entirety exemption for a married couple if both names are on the deed may apply 

See NC Gen. Stat. § 1C‑1601. If your equity in your home is equal to or less than your homestead exemption, you should be able to apply for this exemption and retain your home.

Whether you can ultimately keep your home will depend on your circumstances and the type of bankruptcy you file. A Chapter 13 bankruptcy allows a reorganization of your debts and a repayment plan, which most often allows you to keep your home. However, to qualify for Chapter 13, you need an income that provides a reasonable chance of repayment. 

A Chapter 7 bankruptcy liquidates your non-exempt assets to repay creditors. That may have to involve a sale of your home, but not necessarily—it will depend on the equity in the house and the complete picture of your debts and assets.

Sales and Deeds in Lieu of Foreclosure

If you do not want to remain in the house, you may be able to arrange a short sale with the lender or give them a deed in lieu of foreclosure to the property.

In a short sale, you work with the lender to approve a sale of the property. The property’s purchase price will cover as much of the debt as possible. A lender may also accept a deed in lieu of foreclosure—a simple transfer of the property to the mortgage holder.

In both cases, the sale generally falls “short” of the amount owed. When the lender chooses to pursue the borrower for the amount left over, it seeks a deficiency judgment, but North Carolina does not always allow this. See §§ 45‑21.38, 38A.

Without assistance from a foreclosure attorney, this process could result in unexpected tax obligations and other difficulties.

The Counsel You Need

Our team of compassionate, experienced North Carolina foreclosure and bankruptcy attorneys will be glad to talk to you about your financial outlook and your options. Call us today at 252-659-5045 to schedule your free initial case review.