Each year, thousands of Alabama and Georgia residents lose their homes after defaulting on their mortgage payments. If you’re in danger of losing your home, it’s important to act quickly. Bankruptcy can help you delay or halt the process so that you can protect your most valuable asset. At Carmichael Law Group, we help individuals and families keep their hard-earned homes and property during a financial crisis. Before you give up your home, request a no-risk consultation with an experienced foreclosure defense lawyer.
What Is Foreclosure?
When you purchase a home, your mortgage is secured by the property. That means that if you fall behind on your mortgage payments, the lender can seize the property and thus cut their losses.
Foreclosure is a complex legal process that triggers when you default on a home loan. Notably, however, the lender must carefully follow a series of state and federal laws during a foreclosure. If they skip steps or cut corners, you can use these violations as a defense.
How Does the Foreclosure Process Work?
When you fall behind on your payments, the lender may begin the process of foreclosure at any time, depending on the loan agreement. The lender will notify you in writing of their intention to auction the home at a foreclosure sale. While this process is not quick, it can be traumatic and demoralizing to homeowners. However, you may have legal options to delay or prevent foreclosure.
Sometimes, the lender may be willing to negotiate a modification of the mortgage agreement, although that won’t always be the case. If the lender is amenable to a mortgage modification, you need only continue making payments on the loan under the terms of the revised agreement. However, even if the lender is willing to revise the mortgage agreement, this may only forestall the inevitable foreclosure.
Once you receive a foreclosure notice, you have a limited amount of time to identify possible defenses. Filing bankruptcy can help.
What Is the Automatic Stay?
When you file bankruptcy, the federal courts will notify your creditors and issue an automatic stay. The automatic stay puts a freeze on all collection actions against you, such as lawsuits, harassing phone calls, and repossession efforts. This also includes foreclosure. However, the effectiveness of the automatic stay, as well as the length of time that it lasts, depends on which type of bankruptcy you file.
How Can Chapter 7 Bankruptcy Help With Foreclosure?
A Chapter 7 bankruptcy involves selling many of your assets and using the proceeds to pay off your debts. Once you’ve liquidated your nonexempt property, your remaining debts are discharged. Chapter 7 has many benefits, including the fact that the automatic stay may allow you time to work out payments with your mortgage lender.
However, the pause on foreclosure proceedings is only temporary. And while a Chapter 7 bankruptcy can discharge your mortgage, you may have to give up your home as part of the process.
It’s also important to keep in mind that the lender may choose to file a motion to lift the automatic stay with the bankruptcy court. That means that while Chapter 7 will discharge the loan, the property that secures it will revert to the lender. So the creditor can restart foreclosure actions after your Chapter 7 case concludes.
How Can Chapter 13 Bankruptcy Help With Foreclosure?
The best way to keep your home is to file Chapter 13 bankruptcy. Under Chapter 13, you can qualify for reduced payments that are within your budget. So long as you continue to make payments in accordance with the bankruptcy agreement, you may keep your home, since the bankruptcy is still considered ongoing. However, once the foreclosure sale is complete, your home is gone. So it’s crucial to act quickly.
There are two other things to note here:
- First, your Chapter 13 repayment plan will need to be able to cure an arrearage while simultaneously keeping you current on future payments. You and your foreclosure defense lawyer should carefully consider whether you can realistically afford a plan that addresses both your past-due mortgage payments and your current monthly mortgage bill.
- Second, some debt related to the home may be stripped away or you may qualify for a cramdown which reduces your loan payments to the real current value of the property minus your equity. Your foreclosure defense attorney can help you identify creative, legal ways to reduce your loan payments and help you rebuild your finances.
Speak to a Foreclosure Defense Lawyer Today
No one wants to lose their home to foreclosure. If you have fallen behind on payments, be proactive in speaking to an experienced foreclosure defense attorney as soon as possible. At Carmichael Law Group we can help you devise a strategy that challenges the actions against you, as well as protects your rights. Contact us today to learn more about your options.