Experiencing foreclosure can be incredibly stressful for homeowners. However, if you’re falling behind on mortgage payments and fear losing your home, it’s crucial to understand that you may have options. One of the strongest resources available to you is bankruptcy.
But how does bankruptcy work when facing foreclosure? Is it the best solution for your circumstances? In the blog below, we will review critical information for Georgia homeowners who are at risk of losing their homes.
Stopping Foreclosure in Georgia
Georgia operates as a non-judicial foreclosure state, meaning lenders can foreclose on homes without court intervention. This allows them to proceed swiftly, typically within 30 to 60 days after issuing a notice of default. Therefore, acting quickly is essential if you wish to explore options to halt the process.
How Bankruptcy Can Help
Filing for bankruptcy can either temporarily or permanently halt foreclosure, depending on the type of bankruptcy you file and your long-term financial plan. The primary advantage for homeowners is the automatic stay.
When you file for bankruptcy, the court immediately issues an automatic stay, which halts all collection efforts—including foreclosure. This means that once your bankruptcy case is filed, your lender must stop any scheduled foreclosure sale, at least temporarily.
Chapter 13: A Lifeline for Homeowners
For homeowners wishing to retain their property, Chapter 13 bankruptcy is frequently the most effective option. Under Chapter 13, you propose a repayment plan that enables you to catch up on missed mortgage payments over three to five years while still making your current payments on time.
This can be a great solution if your financial hardship was temporary (job loss or medical emergency) and you’re now in a better position to manage your finances.
Benefits of Chapter 13 for stopping foreclosure:
- Lets you retain ownership of your home
- Gives you time to catch up on missed payments
- Stops additional foreclosure attempts while your plan is active
- May allow you to remove (or “strip”) second or third mortgages if your home is underwater
Chapter 7: Short-Term Relief
Chapter 7 bankruptcy is a liquidation process that could eliminate unsecured debts, such as credit cards and medical bills. While it can delay foreclosure through the automatic stay, it does not provide a mechanism to catch up on missed mortgage payments.
This means that while you may gain a few months of relief, Chapter 7 usually only buys time unless you’re planning to surrender the property or negotiate with the lender outside of court.
Timing Is Everything
If you’re considering bankruptcy as a way to stop foreclosure in Georgia, the timing of your filing matters. The automatic stay only takes effect once your bankruptcy is officially filed with the court. If the foreclosure sale is completed before you file, bankruptcy will not undo it.
Consequently, to avoid losing your home, it is important to speak with an experienced Georgia bankruptcy attorney as soon as possible if you’ve received a notice of default or notice of foreclosure sale.
Other Considerations
While filing for bankruptcy can offer numerous benefits, it may not be the right fit for everyone. Before filing, consider:
- Your income and ability to commit to a repayment plan
- Whether you have significant unsecured debt
- Whether you’re interested in keeping your home long-term
- The potential impact on your credit
Contact Us Today To Review Your Bankruptcy Questions
If you’re behind on mortgage payments and facing the threat of foreclosure, bankruptcy may offer the protection and breathing room you need to save your home, reorganize your finances, and move forward with confidence.
Contact Duncan & Brow today to schedule a consultation with our team and learn whether bankruptcy is the right path for stopping foreclosure and keeping your home.
