If my Home is at Risk of Foreclosure in Atlanta, Georgia, Should I Consider Filing Bankruptcy?

If you are at risk of foreclosure in Atlanta, Georgia, you should consider filing Chapter 7 or Chapter 13 bankruptcy in Georgia to protect your home. Even though you may be working with your mortgage company to catch up on your mortgage payments or trying a home loan modification to save your home in Georgia, your mortgage company could put your home in a pre-foreclosure status. If so, you need to decide how to save your home before the foreclosure sale is scheduled. Foreclosure day in Georgia is always on the first Tuesday of every month, and you should receive notice of the foreclosure date via certified mail, so you will know how much time you need to consider options such as bankruptcy. Some considerations about your foreclosure and bankruptcy in Georgia include:

Whether you would like to keep your home: if you would like to keep your home in a Georgia bankruptcy case, whether you want to keep it long-term or short-term, then you must file bankruptcy before the foreclosure date is scheduled. You cannot file bankruptcy to keep your home after the foreclosure. If you are ready to move out of your house and do not want to keep it, you should probably wait until after the foreclosure to file bankruptcy.

Whether to file Chapter 7 bankruptcy or Chapter 13 bankruptcy: filing Chapter 7 bankruptcy temporarily stops foreclosures in Atlanta, Georgia by creating what is called the automatic bankruptcy stay. The bankruptcy stay is a court order that prevents a mortgage company from foreclosing on a home, even it is the day before foreclosure day (which, in Georgia, is the first Tuesday of every month). Although filing Chapter 7 bankruptcy will require a debtor to ultimately give up their house, it can probably be lived in for a few months after the originally scheduled foreclosure date.

Filing Chapter 13 bankruptcy also uses the automatic bankruptcy stay to stop foreclosures in Atlanta, Georgia. In a Chapter 13 bankruptcy, a debtor reorganizes his or her debts to create a 3 to 5 year repayment plan to creditors. The plan often includes mortgage arrearage that a debtor has accumulated and proposes to pay with no interest or additional late fees. As long as the debtor also makes timely monthly payments on his or her mortgage after filing bankruptcy, the debtor can keep his or her home in a Georgia Chapter 13 bankruptcy case.

Whether to eliminate your second mortgage: filing Chapter 13 bankruptcy can make use of a process known as “lien stripping” to allow Atlanta, Georgia homeowners to avoid paying their second mortgage. Lien stripping changes the status of a second mortgage company from a secured creditor to an unsecured creditor and forces the second mortgage company to cancel the security lien on the property. While the Chapter 13 case is pending, the debtor does not have to make the monthly second mortgage payment. At the end of the Chapter 13, the court issues an order completely canceling the second mortgage lien.

Whether to apply for a home loan modification: there are a few federal home loan modification programs available in Georgia that mortgage companies are currently offering to borrowers, including the Home Affordable Modification Program or HAMP. HAMP has a few requirements for eligibility, but it is not necessary that a borrower be behind on his monthly mortgage payments. Also, even after filing bankruptcy, a debtor may still proceed with the home loan modification process.

Homeowners’ association dues: if you have an HOA associated with your home, you should consider that post-petition HOA dues are non-dischargeable in bankruptcy, so if you file bankruptcy BEFORE the foreclosure, you may be liable on the HOA dues that are incurred after the bankruptcy is filed.

Means test: in order to qualify to file a Chapter 7 bankruptcy in Georgia, you have to pass the means test, which is an income test to determine if you qualify to file Chapter 7 bankruptcy. Under the means test, you are allowed to deduct secured debts, such as mortgage debts, from your monthly disposable income. Thus, if you earn income that is higher than median income for your household size, you may want to file bankruptcy BEFORE foreclosure so that you can deduct the mortgage debt.

Your case must be evaluated individually to determine the best options for you with regard to filing bankruptcy. If you wish to schedule a free consultation for a bankruptcy evaluation in Atlanta, Georgia, please contact the Law Offices of Dixon Davis LLC at 404-593-2620 to schedule a meeting with an Atlanta bankruptcy attorney.