One of the most powerful features of bankruptcy law is the automatic stay on creditor actions, which takes effect the moment the bankruptcy petition is filed. Once the bankruptcy estate is created, the automatic stay prevents any action to collect a debt, including foreclosure on a debtor’s home or property. Thus, by filing a Chapter 7 or Chapter 13 bankruptcy petition, a debtor can at least delay an impending foreclosure. Under Chapter 13, the debtor will be able to keep his or her home once the judge approves a debt repayment plan, under which a debtor would repay what they are behind on their mortgage. Under Chapter 7 liquidation, if the debtor is significantly behind on their mortgage payments and foreclosure has begun, the mortgage company may refuse to allow a reaffirmation agreement and the debtor would ultimately lose their home.  If the debtor is current with their mortgage payments, the mortgage company normally allows a debtor to reaffirm the debt, thus allowing the debtor to keep their home and continue paying their mortgage.

The biggest worry debtors have when considering filing for bankruptcy is what will happen to their home. Many simply assume they will lose their home if they “go bankrupt.” However, a competent bankruptcy attorney can help you assess your debt relief options and obtain the most protection available under the law. If you are behind on your mortgage payments and facing potential foreclosure, call the Houston County bankruptcy lawyers of Boles Holmes White today at 334-366-6086, or email us for a consultation. We have the tools and expertise to guide you through this emotionally trying process, and we can help get you back on solid financial footing.