News & Events

Every year millions of Americans enter into a variety of debt consolidations. As the popularity of debt consolidation has increased, so has the number of dangerous pitfalls in these debt consolidation programs.  Chapter 13 Bankruptcies are a type of debt consolidation allowing you to reorganize your finances by consolidating your debts into one monthly payment. Chapter 13, however, should not be confused with traditional debt consolidation programs.  Chapter 13 has the power of the Federal Bankruptcy Court behind it, and provides many advantages for people seeking debt relief.

-Brian P. Hayes

1. Accuracy of the information on the listing agreement and the seller disclosure form is important. Inaccurate information on the seller disclosure is a common source of misrepresentation lawsuits filed against sellers.
2. The terms and wording of the sales contract are crucial. You are not selling a car or a refrigerator. This is one of the most important documents many people will sign in their lifetime. Get it right the first time.
3. If there is a breach of contract by either party, the earnest money deposit is not the only thing that will be at stake. In North Carolina breach of contract damages can be more than just the deposit money so the seller does not have to be satisfied with just the earnest money deposit.
4. Who is the buyer? The important thing is to sell the house. If the buyer walks away and breaches the contract, the seller is left with only a lawsuit. Check out the buyer before the contract is signed. A contract is only as good as the person who signs it.
5. The seller should know his limitations and not try to be a “know it all”. Sellers should rely on the experts. Real estate agents, attorneys, inspectors, surveyors, and mortgage lenders are a few of the experts the seller should rely on when selling real estate.

-James E. Scarbrough, Association Attorney

1. North Carolina is a “buyer beware” state. That means the buyer is on his own and must check out the condition of the property.
2. State licensed home inspectors should be used to determine the condition of the home. Even if the buyer is a “handyman”, leave the building inspection to an expert.
3. The earnest money deposit is not the only thing the seller will get if the buyer breaches. It is a common misconception that the buyer can refuse to close and will only “lose the deposit money”. The seller can sue for breach of contract damages totaling much more than the earnest money deposit.
4. Choosing the lender is important. It makes good sense to use local lenders, banks, and mortgage brokers. You can always go to their office and get results. Selecting a lender on the internet can be a mistake if the lender does not have a local office.
5. Communication is the key. Communication with the lender and the closing attorney’s office is crucial. Check out the attorney’s office and make sure there is a good staff of real estate paralegals to assist you.

HINT: Use local professionals to help you purchase a home. Local realtors, home inspectors, attorneys, and mortgage lenders will make for a smooth transaction.

-James E. Scarbrough, Association Attorney

This is the third section of our look at living through foreclosure. In this segment we will consider the use of a Chapter 13 Bankruptcy filing to stop foreclosure.

While many readers may realize that bankruptcy laws changed in October, 2005, what they may not realize is the negligible effect of the law changes on most debtors. Using a Chapter 13 filing to stop a foreclosure can have several beneficial aspects. First, a Chapter 13 filing immediately terminates the advancement of the foreclosure proceeding. Under §362 of the Bankruptcy Code an “automatic stay” is imposed which prohibits the lender (and almost all other creditors) from attempting to collect on debts. By stopping the foreclosure early in the process, a Chapter 13 can save the home, and perhaps decrease the foreclosure costs (attorney fees, etc.) incurred by the bank and then passed on to the borrower. Unlike a forbearance agreement, a Chapter 13 filing can protect the home without the cooperation of the lender. Finally, repaying the arrearage on the mortgage in a Chapter 13 will normally give the homeowner between 3 to 5 years. This breaks the arrearage in the smaller pieces, as opposed to the larger lump sums often required in reaffirmation agreements.

While the Chapter 13 filing will impact on one’s credit, the effect may be no worse than the negative credit reporting related to the late payments and foreclosure filing. Additionally, while the Chapter 13 filing remains on the credit report for 7 years, judgments and other litigation can remain in excess of 10 years. Since most people facing foreclosure have defaulted on other debts (credit cards and car payments) as well, the Chapter 13 can be a “one stop” solution to give people a fresh start.

Retaining one’s home after the initiation of the foreclosure is certainly possible-depending on the homeowners financial situation. If you or someone you know is threatened by a foreclosure, our office may be able to help. We are a federally designated Debt Relief Agency under the United States Bankruptcy Laws. We assist people with finding solutions to their debt problems, including, where appropriate, assisting them with the filing of petitions for relief under the United States Bankruptcy Code. If you believe you may need to consider a Bankruptcy, please call to set an appointment. Our initial consultation is free, and in many cases our fees can be paid through the Chapter 13 plan.

-Brian P. Hayes

This is the second edition of our look at living through foreclosure. In this segment we will consider negotiating with the homeowner’s lender as a means to stopping a foreclosure. Lenders are in the “lending business,” and seldom wish to venture into acquiring real estate (that is, completing foreclosures) if avoidable. Occasionally a “forbearance agreement” will be offered which will allow the arrearage on the mortgage and foreclosure costs to be re-paid to the lender. After completion of the forebearance agreement terms, normal monthly payments can resume.

The problem with forebearance agreements is that they typically will require repayment of the deficiency amounts and costs over
a few weeks, or at most a few or several months. Obviously, if the borrower had the money to pay then, they wouldn’t be behind in the first place. If the forebearance agreement fails, the homeowner is often only a few weeks or months “better off,” and usually a few thousand dollars “poorer.” In a couple of situations we are aware of the lender never dismissed the foreclosure proceedings, so when the homeowner defaulted on the forebearance agreement the ensuing sale required only 20 days notice. In other cases, homeowners have used IRA or 401k funds, which resulted in both a heavy tax burden and depleted assets the homeowner could have protected.

Despite the possible pit-falls, forbearance agreements are certainly one possible solution. Negotiating forbearance agreements can be complicated, and is not a process borrowers should undertake ill advisedly. If you or someone you know is threatened by a foreclosure, our office may be able to help. We are a federally designated Debt Relief Agency under the United States Bankruptcy Laws. We assist people with finding solutions to their debt problems, including, where appropriate, assisting them with the filing of petitions for relief under the United States Bankruptcy Code. If you believe you may need to consider a Bankruptcy, please call to set an appointment. Our initial consultation is free, and in many cases our fees can be paid through the Chapter 13 plan.

-Brian P. Hayes

Foreclosure rates are reaching an all time high. That is what the statisticians, and even the local newspapers, have recently been telling us. What options does a homeowner have after a foreclosure is begun? We will look at some of this issue over the next few weeks. Before turning to consider possible solutions, let us consider the problems caused by foreclosures.

Many homeowners assume that, after missing one or a few payments, all they need to do is catch up on the missed payments. Almost all mortgages contain what is known as an “acceleration clause.” What this means is that, once a loan is in default, usually by the homeowner missing a payment by 30 days or more, not just the missed payment is due, but the entire remaining balance of the mortgage. Unless the lender agrees to forego this “acceleration” of the principal balance, avoiding foreclosure could require that the mortgage balance be paid in full. In addition to the problem of acceleration, many fail to realize the danger posed by the foreclosure related expenses which accrue after the start of the foreclosure. These include the banks court fees and other expense, along with its attorney fees. Even assuming no extra attorney fees have been incurred, the trustee’s fee (which goes to the attorney) in a foreclosure is typically five percent (5%) of the loan balance. On a $100,000 mortgage, these fees could easily equal or exceed $6,000.00 for the foreclosure-even before it is completed. Even if the lender agrees to defer the acceleration, it will expect these costs to be repaid along with the arrearage. Even if paid, the record of the foreclosure will appear on one’s credit report for years to come.

Retaining one’s home after the initiation of the foreclosure is certainly possible-depending on the homeowners financial situation. If you or someone you know is threatened by a foreclosure, our office may be able to help. We are a federally designated Debt Relief Agency under the United States Bankruptcy Laws. We assist people with finding solutions to their debt problems, including, where appropriate, assisting them with the filing of petitions for relief under the United States Bankruptcy Code. If you believe you may need to consider a Bankruptcy, please call to set an appointment. Our initial consultation is free, and in many cases our fees can be paid through the Chapter 13 plan.

-Brian P. Hayes