Foreclosure and Bankruptcy
Augusta, Georgia, Bankruptcy Lawyers
If you’re behind in your mortgage or are unable to pay the monthly installment after an adjustment in your variable rate loan, you may be able to avoid foreclosure through Chapter 7 or Chapter 13 bankruptcy. This relief is available even if you have applied for a mortgage modification of your existing home mortgage under HAMP or any other program.
Filing for bankruptcy can allow you to discharge or restructure unsecured debt on credit cards, loans, and medical bills. Once your unsecured debt is wiped out or restructured, you may be able to afford your monthly mortgage payment. Additionally, filing for bankruptcy places an automatic stay on your home, preventing foreclosure until your bankruptcy is finalized.
At Shepard, Plunkett & Hamilton, LLP, our attorneys and board certified bankruptcy specialists help clients understand the options available to them for avoiding foreclosure. We also advise clients regarding loan modifications and the steps they can take to refinance or modify their home mortgage.
Regardless of whether you’re facing foreclosure or are increasingly unable to pay your monthly bills, contact the law office of Shepard, Plunkett & Hamilton, LLP today to learn how we can help you.
Options for Avoiding Foreclosure That Do Not Involve Bankruptcy
In today’s economy, most banks are willing to consider other options besides foreclosure. In general, the following options are available to homeowners who do not want to declare bankruptcy:
- Forbearance Agreement: Provides time to catch up on past due mortgage payments. Homeowners are still required to pay the entire past due amount once the forbearance has expired.
- Repayment Plan: A bank may agree to let a lender pay past-due amounts over a period of time by paying more each month.
- Loan Modification: People with a variable rate or interest only mortgage may be able to change their loan to a fixed rate mortgage that extends the life of their loan but reduces the monthly payment amount.
Foreclosure and Chapter 7 Bankruptcy
In order to qualify for Chapter 7 bankruptcy, your income cannot exceed the median income in Georgia for households similar in size to yours. If you qualify, filing for Chapter 7 will wipe out debt on credit cards, certain kinds of loans, medical bills, and other forms of unsecured debt.
The court may sell some of your property in order to pay all or a portion of what you owe to your creditors. Typically, unnecessary luxury items are subject to liquidation, such as expensive cars, flat screen TVs, high end appliances, boats, etc.
Whether or not you can avoid foreclosure under Chapter 7 will depend on whether you can pay your monthly mortgage after your unsecured debt is wiped cleaned.
Theoretically, if you no longer have to worry about paying hundreds of dollars in credit car bills, loan payments, or old medical bills, you should be able to use that money to pay your mortgage. If after declaring Chapter 7 bankruptcy you are still unable to keep current on your mortgage, you could lose your home.
Foreclosure and Chapter 13 Bankruptcy
Chapter 13 requires a person to pay back 80% to 100% of what they owe creditors over a 3 to 5 year period. Under Chapter 13, you will be required to submit a repayment plan subject to approval by the court. If a bankruptcy judge believes your proposed repayment plan is acceptable, your creditors must abide by its terms.
Here, Chapter 13 allows you to create a manageable monthly repayment schedule that may involve reduced interest rates on unsecured debt and reasonable monthly minimum payments. If you are behind on your mortgage, you can negotiate an agreement with your bank that will allow you to catch up on payments while avoiding foreclosure.
Questions? Contact Shepard, Plunkett & Hamilton Today
If you are concerned about foreclosure, contact our office today to schedule an appointment and learn how we can help you.