The threat of foreclosure is one of the most frightening things for a homeowner, know how bankruptcy can stop foreclosure. When you fall behind on your mortgage payments, your lender has the right to foreclose on the property. Foreclosure is the legal proceeding whereby your mortgage lender sells your real property. The lender then applies for the money from the sale of the property toward the debt owed on it.
How Bankruptcy Can Stop Foreclosure
As soon as you file for bankruptcy any pending foreclosure action must stop. This is because of the Automatic Stay, which is a provision of the U.S. Bankruptcy code that mandates all collection activity against a debtor stop.
Bankruptcy will at least temporarily stop foreclosure, but to save your home you will have to get current on your mortgage payments. Also, to prevent foreclosure you must make your monthly mortgage payment during and after bankruptcy.
Keeping Your Home After Bankruptcy: Protecting Equity
To keep your home through bankruptcy you must not have too much equity in it. Bankruptcy law provides for you to keep the property, assets, and other belongings valued up to a certain dollar amount through exemptions. The Georgia homestead exemption allows you to protect up to $21,500 of equity in real estate. If the title to the property is held by one of two spouses, you may exempt up to $43,000 of equity in real estate.
You can determine the amount of equity you have in your home by subtracting the amount of your mortgage(s) from the current fair market value of the property. As long as your equity is less than the Georgia homestead exemption, then you will be able to protect its equity through bankruptcy.
Keeping Your Home After Bankruptcy: Paying Mortgage Arrears
To keep your home after bankruptcy you must get and remain current on your mortgage payments.
If you do not pay your mortgage arrears, your lender will be able to foreclose on your house either after bankruptcy or during bankruptcy if it properly asks the Bankruptcy Court permission to do so.
Filing for Chapter 7 or 13 will immediately stop a pending foreclosure sale; however, Chapter 13 bankruptcy offers benefits to homeowners that Chapter 7 does not. Chapter 13 creates an opportunity for homeowners to repay mortgage arrears, and in some cases, to “lien strip” (erase) a second mortgage.
Chapter 13 bankruptcy creates a three to five-year repayment plan. Homeowners may include missed mortgage payments in their Chapter 13 repayment plan. Only payments missed prior to filing may be included. Mortgage payments missed after the date the case is filed cannot be included in the plan.
We Can Help You Keep Your Home After Bankruptcy
We help hundreds of homeowners just like you keep their homes through bankruptcy each year. But our clients are never just a number. You will not be left in the hands of a paralegal. You will have access to your attorney throughout your bankruptcy case.
Call us today at (912) 351-9000 or contact us via the web to schedule a free consultation.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code. Find out more about Bankruptcy in our guide: All About Bankruptcy.