So far you have failed to do the one thing that everyone in financial distress should do. Lenders lie and engage in anti-consumer practices every day. Much of their conduct is frankly despicable, and sometimes it is even illegal. Because of that, you should have seen a lawyer long ago. You may or may not have remedies to protect or save the home, and you also need to look at what to do to protect you from an enormous suit (and future garnishment) by teh 2nd mortgage lender (and maybe also the first). This means see a lawyer immediately (as in today).
If your foreclosure is set for February, you are nearly out of time. At this late stage, likely your immediate remedy may be Chapter 13 (or 7) bankruptcy. Feel free to contact me at 404-768-3509 if you wish to look at options, but don't wait another day.
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As was mentioned in the earlier answer - you need to talk to a good bankruptcy attorney now.
Bankruptcy is a very complicated process. It is wise to talk to an experienced bankruptcy attorney before deciding to take this important step. I am attaching a link to some free videos that explain how bankruptcy works. Most Arizona consumer bankruptcy attorneys offer a free consultation about the basics of bankruptcy.
Please take time to educate yourself about bankruptcy and to determine which attorney is the best to assist you in the process. Don’t assume the attorney is being completely honest about their experience and capabilities. Check them out. Avoid the attorneys who advertise on TV or profess a 100% success rate in their Internet ads. It costs hundreds or thousands of dollars for these ads and someone has to pay for them – the clients. These attorneys mass produce the work and do not offer the client the hands on assistance that is necessary in a well-planned bankruptcy. Normally these firms assign all or most of the work to paralegals and the client rarely talks to an attorney.
When interviewing the attorney ask them how long they have practiced bankruptcy law. Ask what percentage of their practice is focused on consumer work. Ask whether they are experienced in both chapter 7 and chapter 13 cases. Ask the attorney for references. Ask about their policy of returning phone calls. They should be committed to answering specific questions about your situation and help you understand your options. If, after talking with them you are still confused about the issues you raised, find another attorney. Check them out with the various ranking sources: such as www.AVVO.com, and the State Bar. An attorney is should be your guide through this process. They should educate you, be there to assist you in how to avoid pitfalls and help you plan for your future after bankruptcy. There are hundreds of “bankruptcy” attorneys in Arizona. Of those just a few will fit the criteria set forth above. Again, bankruptcy is a very complicated process and you want to use an attorney who will be there when you need them.
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This firm is in the business of helping people and companies file for bankruptcy protection. Therefore, the bankruptcy code requires that we call our firm a "debt relief agency." This information is provided for general information purposes only and is not intended to be a legal opinion, legal advice or a complete discussion of the related issues. Nor is this advice intended to create a client - attorney relationship. Every individual's factual situation is different and you should seek independent legal advice from an attorney familiar with the laws of your state or locality regarding specific information.
While some of the things you posted are curious, a couple things stand out. One, you have not been paying your mortgage for some time. That means you are in default and the lenders will foreclose. Second, you mention a letter about foreclosure (which should be no surprise), but don't tell us who it is from, exactly what is says (there is no "accelerated foreclosure"), and if a foreclosure date has been set (such as the first Tuesday of February) or if it has already taken place. If there is no foreclosure, there is no illegal foreclosure. Details and facts matter. As far as the second lender taking over the property, perhaps they thought you abandoned. Did you ask them?