When facing the distressing prospect of losing your home to foreclosure, it is only natural to explore all possible options to halt this process. Bankruptcy is one avenue that often comes to mind, but you might wonder if it is the only way to stop a home foreclosure.
Exploring all your choices can help you understand why bankruptcy might still be one of the best solutions to protect your home.
Understanding home foreclosure
When you take out a mortgage to purchase a home, you agree to repay the loan over a set period. If you fall behind on your payments, your lender has the legal right to initiate foreclosure proceedings. This means they can sell your home to recover the outstanding debt.
While bankruptcy can be a powerful tool to prevent foreclosure, it is not the only option available. Other avenues exist, such as loan modification, forbearance, short sale or a deed in lieu of foreclosure.
These options all entail cooperating with your mortgage lender and require their approval. Keep in mind that, in some situations, it may be difficult to negotiate a favorable arrangement with a lender who has already decided on foreclosure.
The power of bankruptcy
Even with several alternatives available, bankruptcy stands out for several reasons:
- Automatic stay: Filing for bankruptcy triggers an automatic stay that immediately halts all collection actions, including foreclosure.
- Chapter 13 repayment plan: In a Chapter 13 bankruptcy, you can propose a repayment plan that allows you to catch up on missed mortgage payments over several years.
- Discharge of unsecured debts: By eliminating unsecured debts like credit card bills and medical expenses, bankruptcy can free up funds to help you meet your mortgage obligations.
- Protection of assets: Bankruptcy laws often offer exemptions that protect certain assets from liquidation, including your primary residence.
One other important consideration when it comes to filing for bankruptcy is that it does not require your lender’s approval. You can choose to proceed with bankruptcy as a way to get your debts under control on your own terms.
Statistics show that Georgia has a foreclosure rate of one in every 770 homes, making it among the highest in the nation. Georgia residents should understand their options to overcome foreclosure in case they experience a difficult financial situation.