Tennessee is a Non-Judicial Foreclosure State - Your Lender does NOT have to take you to Court in order to Foreclose.
Once you have "Defaulted" on your loan, your Lender can begin Foreclosure proceedings.
In MOST but not ALL cases, the lender is required to give you a 60-day "Notice of Right to Foreclose". Exceptions to this requirement apply, including but not limited to the situation in which the lender has met with you within 180 days and advised you that default can result in foreclosure. DO NOT ASSUME THAT YOU ARE ENTITLED TO THIS NOTICE.
The lender is required to make at least three (3) different advertisements of the sale of the real estate, with the first publication being at least twenty (20) days before the sale. THERE IS NO REQUIREMENT THAT YOU, THE OWNER, SEE THESE ADVERTISEMENTS, AND IT IS UNLIKELY THAT THEY WILL BE RUN IN A TV COMMERCIAL ON SUPERBOWL SUNDAY.
Unless you are able to pay in full all monies due, your house will be sold at auction on the Courthouse steps.
In the event that there is a deficiency (the amount you owe on the loan is more than the selling price at auction), the lender can sue you for the difference, often times in the tens of thousands of dollars.
The Bankruptcy Defense
Chapter 13, known as a "wage-earner" bankruptcy, allows you to propose a repayment plan of your debts to the Court over a period of three (3) to five (5) years.
The filing of a Chapter 13 puts into place the "Automatic Stay", a Court order effectively forcing all collection efforts by a creditor, including foreclosure, to stop immediately.
If you can pay your ongoing mortgage each month, and pay your "arrears" (past due payments) over the course of 36 to 60 months, you will avoid foreclosure and stay in your home.
While $4,500.00 in past due payments seems daunting (and nearly impossible) all at once, a Chapter 13 Bankruptcy allows you to pay that amount at a rate of $75.00 per month in a 5 year plan...and the creditor can do very little griping.
Even if you don't earn ANY income, if you can prove to the Court that through family assistance you can make the payments, you will be able to stay in your home.
And if your first mortgage is underwater, YOU CAN STRIP YOUR SECOND MORTGAGE, and repay them as an unsecured debt.
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