People do not often associate Bankruptcy with stopping foreclosure and saving their home. However, that is actually one of the main objectives of Chapter 13 Bankruptcy (or Debtors Court, as it is called here in the Birmingham, Alabama area). Unlike Chapter 7 Bankruptcy, where an individual seeks to get rid of his or her debts, Debtors Court involves a repayment plan or debt consolidation plan.
When you file a Debtors Court case, federal law will stop the foreclosure sale so that you can save your home. The Court will allow you to catch up on your mortgage payments. Once you file a Debtors Court case, we contact the attorneys for the mortgage company to notify them to stop the foreclosure sale. In addition, the Court sends your mortgage company written notice of your filing.
The mortgage company is prohibited by federal law from going forward with the scheduled foreclosure sale. Therefore, the mortgage company will have no choice; the foreclosure sale cannot go forward.
Timing of the Filing
Prior to 1994, there was uncertainty as to when a Debtors Court case had to be filed to stop a foreclosure sale. However, pursuant to the 1994 amendments the Code, the case must be filed before the foreclosure sale takes place. It is critical that you contact our office as soon as you find out that your home may be scheduled for a foreclosure sale. If the case is filed after the foreclosure sale, then it may be too late to save your home with a Debtors Court case.
On that same note, it is important that you know exactly when the foreclosure sale is set. Do not assume that the beginning of the foreclosure process means that the foreclosure sale has taken place.
Foreclosure Sale Notice
In Alabama, your mortgage documentation will specify whether your mortgage company is required to give you actual notice of the date of the foreclosure sale. Alabama law does not require the mortgage company to give you actual notice of the date unless your mortgage documentation states that they must do so. The law simply requires that the foreclosure sale be advertised in a local newspaper for three consecutive weeks. This advertised notice must give the date, time, and place of the foreclosure sale, which is usually at the front of the courthouse in the county where your property is located.
If you would like to discuss Debtors Court or Bankruptcy options, please email me at firstname.lastname@example.org.