Can Bankruptcy Help Me Stop Foreclosure?
As a secured loan, a mortgage allows the lender to reclaim or repossess the property if payments are not made on the loan.
The process of repossession is known as foreclosure. Foreclosure is a complicated and time sensitive process that can lead to you having to give up your home. Bankruptcy can offer immediate relief through the Automatic Stay. Once a petition for bankruptcy has been filed, the Automatic Stay halts collection activities including those for overdue mortgage payments and foreclosure costs. While the outcome may differ depending on whether Chapter 7 or Chapter 13 is filed, the Automatic Stay will temporarily stop the foreclosure process, and any eviction proceedings that may have been initiated.
The Walker Law Firm works with bankruptcies that involve foreclosures in the Greater Dothan, Alabama area.
Foreclosure Under Chapter 7
Under Chapter 7 the Automatic Stay offers you time to negotiate payments with the lender. Chapter 7 also allows the mortgage to be discharged. If the mortgage is discharged the lender will be able to reclaim the property after the bankruptcy is discharged. While the you will likely need to find a new place to live, any debt related to the mortgage or foreclosure is wiped out.
Foreclosure Under Chapter 13
For a petitioner who intends on keeping their home, Chapter 13 may be the better option. If you can realistically foresee being able to resume making payments, the payments can often be reduced as part of the Bankruptcy Court’s approved repayment plan. The repayment plan tends to last from 3-5 years as part of the bankruptcy process. As long as all payments are made under the terms of the bankruptcy agreement, you can keep your home. In some cases, some mortgage related debt can be discharged and reduced permanent payments can be negotiated.
If you are behind on your mortgage payments, or facing the prospect of foreclosure or eviction, call us today for a FREE consultation!
An experienced bankruptcy attorney with a working knowledge of the foreclosure process can be essential in helping you to keep your home. You may also want to walk away and make a fresh start without the mortgage debt holding you down. We are a Dothan, AL Law Firm and ready to help you!