If you are an Alabama homeowner struggling to make your mortgage payments, you may be facing a foreclosure. To to stop an Alabama home foreclosure, bankruptcy is a possible option.
If you are an Alabama homeowner struggling to make your mortgage payments, you may be facing a foreclosure. To to stop an Alabama home foreclosure, bankruptcy is a possible option. Bankruptcy puts a halt to the pre-foreclosure or foreclosure process and gives you time to reassess your financial situation and prepare a payment plan that can save your home.
There are two forms of bankruptcy in Alabama to prevent home foreclosure: Chapter 7 and Chapter 13. Chapter 7 bankruptcy is filed when you want to seek total financial relief by having as much debt forgiven as possible. Most assets are liquidated and used to pay creditors. In exchange, any debt still outstanding is forgiven via a court order. Your primary residence will probably be exempt in a Chapter 7 filing, but a lender can still attempt to foreclose on the home if you cannot either bring the mortgage current or pay it off completely. If you plan to file for Chapter 7 protection, you can wait until just before the home is scheduled to be sold at a foreclosure auction, because Chapter 7 proceedings give you more time to come up with funds to pay the past due amount.
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Another option for bankruptcy to stop an Alabama home foreclosure is to file for Chapter 13 bankruptcy protection. In a Chapter 13, you are required to repay all your debt over a period of three to five years. The past due amount of a mortgage can be included in that debt, which puts a halt to the foreclosure process. You create a repayment plan and can save your home if you stay current on the repayment plan and the mortgage.
There are other things you should consider before filing for Chapter 7 or Chapter 13 bankruptcy. First, a lender can request that a bankruptcy court lift the stay on the foreclosure and request the process to continue. Most lenders do not find it is worth the time or effort to do so, but it is still an option they have, so be prepared for the worst-case scenario. Also, a lender can refuse to take less than the entire amount you owe on the mortgage instead of agreeing to let the past due payments be forgiven or included in the repayment plan.
If you are trying to save your home, filing for bankruptcy can be a viable option. To stop an Alabama home foreclosure using bankruptcy, talk to a bankruptcy attorney about your specific situation and options. If you think a pre-foreclosure sale is a better option, go to Reply! to find a real estate agent to help.