Can Bankruptcy Stop Foreclosure, Which is Expected to Increase in 2012?

Mortgage companies are foreclosing on homes in Georgia at an increased rate in 2012, and bankruptcy can help homeowners stop foreclosure and keep their homes. According to an article in Bloomberg, Realty Trac Inc. predicts that there will be more than 1 million US homes seized this year. Georgia was ranked the fourth highest in foreclosure rates at one in 37 houses!

Bankruptcy can assist you with saving your Georgia home from foreclosure. There are two types of individual bankruptcy chapters that a debtor may file: Chapter 7 and Chapter 13. Both types of bankruptcy, if filed prior to the scheduled foreclosure date, effectively stop the foreclosure.

What is the Difference Between Chapter 7 and Chapter 13 Regarding Keeping My House in Georgia?

Chapter 7: Filing Chapter 7 initiates a court order that will prevent a mortgage company from foreclosing on your home, which is how bankruptcy stops foreclosure. However, Chapter 7 does not provide a long-term plan to repay mortgage arrears back to the mortgage company. If you file Chapter 7 and you are behind on your mortgage, the bankruptcy filing does stop the foreclosure, but it is a temporary fix. The only way you can keep your home long-term in Chapter 7 is to become current on all past-due mortgage payments. Many people who file Chapter 7 in Georgia to save their homes ultimately decided to surrender the home back to the bank but file bankruptcy in order to remain in their homes temporarily and then wipe out all mortgage debts. I usually ask my clients whether they can rent a home in their area for less than the amount of their mortgage. If the answer is yes and the homeowner is extremely delinquent on the mortgage, then it may make sense to give up the house after the bankruptcy has been filed. Chapter 7 usually closes out within 6 months from the date you file your case.

Chapter 13: Filing Chapter 13 in Georgia also prevents the mortgage company from foreclosing due to the same court order that is issued in a Chapter 7 case. Chapter 13 also provides a long-term repayment plan for mortgage arrears. Unlike Chapter 7, Chapter 13 lasts from 3 to 5 years. In a Chapter 13 case, a debtor who wishes to keep his home files a plan outlining how he will repay the past due mortgage arrears. In addition to paying the past due mortgage arrears, a debtor must also make all future monthly mortgage payments on time in order to keep the home long-term. Any failure to make either payments could result in dismissal of the case and ultimately foreclosure. If you cannot afford your mortgage payment in the first place, then Chapter 13 is probably not feasible.

Can Bankruptcy Stop Foreclosure in Georgia? It Can, with Proper Legal Counsel

As you can see, bankruptcy does provide some good options for you to keep your home if it is scheduled for foreclosure in Georgia. A bankruptcy attorney in Atlanta is absolutely necessary to help you decide what type of bankruptcy you should file to save your home. To schedule a free consultation with a bankruptcy attorney, please call the Law Offices of Charles Clapp at 404.585.0040.


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