Consumer Law

Will Bankruptcy Stop A Foreclosure In Alabama?

By M. Stan Herring

We often asked this question by Alabama consumers facing foreclosure. The answer is "It depends." I know, that sounds like a lawyer non answer but stick with me.

If you file bankruptcy AFTER the foreclosure, then it won't stop the foreclosure. Its already happened.

If you file bankruptcy BEFORE the foreclosure, then it normally will stop the foreclosure. Here is why I can't give a definite "Yes" answer.

Sometimes a consumer in Alabama may have filed bankruptcy too often and the "automatic stay" does not fully protect the consumer on stopping a foreclosure. The automatic stay is what "freezes" all the creditors in their collection efforts. It is to let the bankruptcy court sort out what will happen and to give the consumer-debtor some breathing room.

Also, the court normally can't alter the terms of the mortgage payments. Those payments must continue to be paid and you typically have to pay the back payments, or arrearage, as well. So when you meet with a bankruptcy attorney you need to find out if filing the bankruptcy will actually stop the foreclosure and if you can afford to make all the payments you must pay so that the mortgage company is not allowed to request permission to begin foreclosure proceedings against you.

We'll talk more about the automatic stay and how a mortgage company (typically the "servicer") can request that the bankruptcy court take away ("lift") the stay so foreclosure can proceed against you.

We will also discuss more about the option of bankruptcy (and other options to foreclosures) so that you will have as many tools as possible if you are facing foreclosure in Alabama.

If you would like more information on foreclosures or what to do after a foreclosure, please feel free to check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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Full post as published by Alabama Consumer Blog on March 23, 2010 (boomark / email).