Foreclosure Relief: What Are Surplus Funds?

            Anyone who has gone through foreclosure knows that calling it “stressful” would be an understatement. People who have gone through foreclosure have seen the homes that they have invested thousands, tens of thousands, or even hundreds of thousands of dollars into – on top of countless hours of maintenance – swiftly taken away from them by lenders over missed payments. To make matters worse, it is usually due to something completely out of the homeowners control such as an interruption at the work place or a serious health care issue in the family.

            While nothing can completely fix that kind of misfortune, the good news is that not all of that hard-earned investment is lost. Many homes that are sold at foreclosure sales are actually being sold for an amount in excess of the remaining debt on the property causing the foreclosure. This money generated in excess of the debt creates what is known as a “surplus fund” that is deposited with the Clerk of Superior Court. For example: If the balance of your debt with the lender was $50,000.00 and your house sold for $100,000.00, then a surplus fund of $50,000.00 was created and deposited with the Clerk of Superior Court.

             The reason the funds are deposited with the Clerk of Superior Court instead of being given directly to the homeowner is in case there are creditors or other interested parties that may have an interest or claim to these funds. Because of this, many victims of foreclosure are not even aware that the State is holding their money! As a matter of fact, North Carolina currently holds over $400,000,000.00 in surplus funds. So how does someone get the money they are owed out of the court system? The following is an over simplification - but provides some insight into this process:

-       File the necessary legal paperwork with the Clerk of Superior Court.
-       Publish notice to potential creditors.
-       Document a search for judgments and debts.
-       Conduct a hearing and obtain a disbursement order.

            This is a unique type of legal matter called a “special proceeding.” At Barber Power Law Group our experienced special proceedings attorneys will navigate through this entire process and fight to recover the money you deserve. If you think you may be owed surplus funds by the State, please call our office at (980) 202-5679 to schedule a free consultation with no commitment.