If you’ve fallen behind on your mortgage and can’t seem to catch up your missed payments, you have several options. Bankruptcy can stop a foreclosure sale of your home. Bankruptcy may or may not be a permanent solution, but it might give you enough time to save your house.
Chapter 7 bankruptcy will only stop the foreclosure process temporarily. Chapter 7 bankruptcy is not a reorganization and will not help you catch up missed mortgage payments. With Chapter 13 bankruptcy, you can make up your delinquent mortgage payments over the course of three to five years. Bankruptcy isn’t the only option for saving your home. You might be able to refinance your loan, get a loan modification or make catch-up payments on your own.
Nonjudicial Foreclosure Laws in Alabama
Alabama is considered a nonjudicial foreclosure state. In a nonjudicial foreclosure state, a mortgage creditor does not need a court order to obtain ownership of your home. If you are currently in foreclosure, you should immediately seek advice from an attorney. Bankruptcy may be able to help you now.
Foreclosure in Chapter 7 vs. Chapter 13
When a person files a petition for Chapter 7 or Chapter 13 bankruptcy, an automatic stay immediately goes into effect. The automatic stay has a chilling effect because it puts an immediate stop to the collection efforts of your creditors, including foreclosure sales.
The process for completing Chapter 7 bankruptcy is four to six months. The automatic stay protects you while your case is pending, unless the mortgage company comes to court and request permission for relief from the stay. Because your mortgage is a secured debt that won’t be forgiven under Chapter 7, the foreclosure case will likely resume after you receive your bankruptcy discharge. You can discharge your personal obligation to a mortgage company in a Chapter 7, but you will not get a free house.
If you file a Chapter 13 bankruptcy, you’ll have an opportunity to restructure your delinquent mortgage payments over three to five years. You will also be required to make you ongoing mortgage payments directly to the mortgage company or through your Chapter 13 trustee. Once you make all of your required bankruptcy plan payments and complete your case, we will assist you in obtaining an order from the court that deems your mortgage current. We don’t want any questions to exist as to where you stand with your mortgage company. Making use of the bankruptcy process can help you save your home from foreclosure.
If you’re facing foreclosure or financial problems, contact Allums Welsch in Bessemer, Alabama, to schedule a free initial consultation. Our friendly staff and bankruptcy attorneys will get to know you and help you find a way to keep your home. We’ve helped clients in the greater Birmingham area for more than 15 years.