Is bankruptcy a good way to stop a foreclosure in Alabama?

“Is bankruptcy a good way to stop a foreclosure in Alabama?”

Is bankruptcy a good way to stop a foreclosure in Alabama?You have a foreclosure coming up, and you’re wondering if you should file bankruptcy before that foreclosure happens in Alabama.

You’ve also, most likely, have gotten several letters from bankruptcy attorneys telling you that they can stop your foreclosure by filing bankruptcy.

If you’ve done any research, you’ll find out about this thing called “retargeting,” which is basically where a business can pay to follow you around in a sense.

This is why, if you’ve used Amazon to look for a pair of shoes, you may see ads for those shoes everywhere by the way.

Chances are, bankruptcy attorneys are doing the same thing.  So you are probably seeing all sorts of online ads for bankruptcy.

Anyway, you’re wondering what you should do.

First of all, you should look at all of your options.

Too many companies say that bankruptcy is the only option when you’re dealing with a foreclosure.

Think of it this way: to the man who has a hammer, everything is a nail.

That’s the way these firms see bankruptcy.

Bankruptcy can be an option, but it is a life-altering event.

Now, the objection we usually see to that statement is, “It will stop the foreclosure!”

To their credit, it usually will stop the foreclosure.

Let’s look at it this way.

I break my hand, and it hurts a lot.

Someone comes up and chops my arm off when they hear me say that it hurts.

Well, my hand doesn’t hurt anymore, but that was probably an extreme measure to take.  Too extreme, right?

There are times where we need to amputate, however, usually there are some other options to consider.

It’s the same with bankruptcy.

99.9% of the time, there’s a better option to take when you’re facing foreclosure.

It doesn’t always stop the foreclosure, or you may have filed bankruptcy too recently to be able to do it again.

However, let’s take a moment and assume that it will stop the foreclosure.

You have to make your payments.  Your current payments.  And your payments for the back amount (arrearage).

If you don’t, then they can file what’s called a motion for relief from stay. This basically means that they can go to the bankruptcy judge and say, “Look, we know that you told us not to foreclose on this person, but they’re not paying their bills. Can you free us from this agreement?”

The bankruptcy judge will look at your case, maybe give you one chance to pay the mortgage company, and if you don’t the judge will grant the mortgage company’s motion.

That means that the bankruptcy no longer protects you from foreclosure.

So you went through the life-altering process, and you’re still going to be foreclosed on.

Let’s take a brief look at some other options.

We talk about these options in depth in other articles (especially here), but here’s an overview of some of the options you have.

You can reinstate the loan (bring it up to a current status), which is rare but it can happen.

You may be able to do a loan modification, or some type of loss mitigation to stop the foreclosure.

Most people who either want to stay in their house or leave the house without being foreclosed on, take the option of suing their mortgage company. 

You may be wondering, “What would be the basis for suing them?”

Well, normally your mortgage will give you the right to sue before the foreclosure happens.

Usually, it’s in paragraph 22, but sometimes it’s 19 of your mortgage document.  (Your mortgage document is what secures the debt — the note — to your property and gives the right to foreclose).

The mortgage will say that you can sue them before the foreclosure to assert defenses to being in default, your loan being accelerated, and to foreclosure.

In other words, you give all the information and let the judge decide if a foreclosure should take place.

Basically, you’re turning a non-judicial foreclosure (what Alabama normally is) into a judicial foreclosure.

So yes, bankruptcy is one option.

However, for most consumers, it’s a bad option.

If you’re one of the few consumers that bankruptcy works for, that’s great! It’s an incredibly valuable tool when it’s appropriate.

But just because your hand hurts doesn’t mean that you should cut off your whole arm.

Explore your options.

Hope this is helpful to you!

If you have any questions, feel free to get in touch with us.

We would be glad to look at your case and help you figure out the best course of action.

You can reach us by phone at 1-205-879-2447, or you can fill out a contact form and we will get in touch with you quickly.

We look forward to chatting with you!

Thanks for reading, and have a great day.

-John G. Watts

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  1. […] I’m behind on my mortgage and have filed Chapter 13 to save my house from foreclosure. […]

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