“Is bankruptcy a good option to stop an Alabama foreclosure?”

“Is bankruptcy a good option to stop an Alabama foreclosure?”

"Is bankruptcy a good option to stop an Alabama foreclosure?"Bankruptcy is an option — we’ll talk about whether it is a good option or not — to stop an Alabama foreclosure that has not yet happened and it is something to be considered.

Let’s go through this together.

First, a bankruptcy will only stop an Alabama foreclosure if the foreclosure has not yet happened.

A bankruptcy can stop a foreclosure but it does not reverse a foreclosure.

Sometimes we get calls from folks who have already been foreclosed — and usually are being sued for “ejectment” to evict them from their homes — and the question is “Can I file bankruptcy and stop the foreclosure?”

The answer is “No.”

There is nothing to stop.

So for bankruptcy to actually stop — to prevent — a foreclosure, it must be filed before the foreclosure actually occurs.

(You can find out about how bankruptcy after a foreclosure can help you).

Second, a bankruptcy may only be a temporary solution to a foreclosure.

The bankruptcy will stop the foreclosure — at least temporarily but it may not stop it forever.

This is known as the “automatic stay” or a “freezing” of all collection activities.

A chapter 7 bankruptcy — sometimes called “straight bankruptcy” — will stop the foreclosure but then the mortgage company will point out the payments are behind and ask the court to “lift” the stay that stops the foreclosure.

This is often granted.

Once this happens, the foreclosure will proceed.

Often folks get confused on this because they receive a “discharge” which means they do not owe their debts anymore.

This is true.

But the mortgage company can take the property, even though you don’t owe a debt, because the property is the security for the loan.

The property is taken by the foreclosure process.

Third, you still have to pay for your house if you want to keep it — even if you file bankruptcy.

If you file for chapter 13 bankruptcy — sometimes called “debtor’s court” — then you can normally keep your house if you make the current payments and if you are paying money into court in accordance with your bankruptcy plan.

But this does mean you have to pay for your house.

So, is filing bankruptcy a good option or a bad option?  It depends….

Can you afford your house?

Do you have a valid lawsuit you could file against the mortgage company that would stop the foreclosure and not require you to file for bankruptcy?

Can you get a loan modification through the mortgage company and not have to file bankruptcy?

If the foreclosure is not going to be stopped then filing a chapter 13 can be a good idea to stop the foreclosure and get on track with court approved payments on any back amount owed — and to make sure the back amount is truly owed.

Bottom line is you need to get with a lawyer who can advise you on all of your options about how to prevent a foreclosure.

Bankruptcy is a tool but is only one tool.

Sometimes the best tool.

Sometimes not.

Contact Us.

If you live in Alabama and want to meet with us, call us at 1-205-879-2447.

You can also fill out our online contact form and we will either email or call you back as soon as we get your message.

Thanks for reading, and have a great day!

-John G. Watts


  1. jessica says:

    My husband filed bankrupcy in 2011 to keep the bank which is citimort. from foreclosing on us, the mortage is in both our names but our lawyer said it was best if only one of us filed, in cased if we had to go back and file again, so now we have got behind on mortage payments and the mortage company has filed papers to lift the automation stay, so next i am sure they will start foreclosure again, we will be talking to our lawyer next week about filing 13 on me but is their any thing we can do besides that, the reason we got behind was that the court payment and house payment are too much together, and before we filed in 2011 we filied for modificaton be never got approved, but we received money from them when the govenment reviwed the companys modificatons, I just looking for help to stay in my house my loan has been sold, citi is not the orgin writer, thanks for your time.

    • John Watts says:


      You are facing a common situation when you file bankruptcy, if you don’t keep up the payments then the mortgage company will file a motion for “relief” from the automatic stay. The automatic stay is the law that prevents creditors from taking any action against you, including starting foreclosure.

      Definitely talk with your lawyer because he or she will have laid out a strategy for you I’m sure. I will say this — if you can’t afford your mortgage then you filing chapter 13 may just be buying some time so you need to figure out if you filing for bankruptcy will actually improve your situation or not.

      It is difficult when you can’t pay the payments especially when CitiMortgage has played games with modification.

      Bottom line is get with your lawyer and see what your options are….

      Best wishes

      John Watts
      Birmingham, Alabama

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