The nationwide COVID foreclosure moratorium ended on July 31, 2021, and since then foreclosure rates have been rising steadily. Georgia is in the top 10 states for foreclosures, recording a total of 2,592 foreclosures (one of every 1,702 housing units) in the first quarter of 2022.
Causes of Foreclosure
Causes of foreclosure include things that reduce income or increase monthly expenses, causing homeowners to be unable to make their mortgage payment for three months. These reasons can include medical expenses, job loss, credit card debt, or a large unexpected expense such as necessary car or home repair.
Sometimes individuals take short-term steps to try fix their monthly budget, but these steps often create long-term problems. Easy sources of credit such as payday loans, title pawns, and credit cards can be used to pay for regular monthly expenses. However, they all come with a high cost, including long term interest and loan payments that must be made the very next month, making it even harder for the family to pay its bills in the future.
The Foreclosure Process in Georgia
The foreclosure problem is particularly acute in Georgia, which allows mortgage lenders to use non-judicial foreclosure. While many states require banks and mortgage companies to seek permission from a Court to foreclose, Georgia does not require a mortgage lender to get Court approval. In Georgia the lender need only mail you a notice of intent to foreclose, and run a foreclosure advertisement in the local newspaper for 4 weeks. After the completion of the 4 week advertising, your house can be sold by public auction. This short-term process doesn’t give families enough time to financially recover from sickness or job loss.
The impact of foreclosure can be devastating to a family. Aside from the loss of housing (and the high expense of moving to a rental unit), foreclosure can also lead to a substantial loss of equity in the real estate, a large reduction in your credit score, and possibly a large income tax bill (if part of the mortgage is forgiven by the lender).
There is a Solution with Chapter 13
No one dreams of filing bankruptcy, but bankruptcy can be a very useful tool to protect yourself and your family from foreclosure. A Chapter 13 bankruptcy sets up a payment plan which is based on your monthly income and expenses. The plan can last up to a maximum of 5 years. During those 5 years you make a monthly payment to the bankruptcy trustee, and those funds are applied to your mortgage arrearage (and your other debts) until the arrears are paid in full. While you are in Chapter 13 the mortgage company is legally prevented from foreclosing on your house.
Chapter 13 is often used as a last-minute foreclosure solution, because it can be filed the day before a foreclosure and it will still prevent the sale of your house.
If you’re facing foreclosure don’t delay. Contact an experienced bankruptcy attorney for a free consultation. In the past 25 years we’ve helped over 5,000 individuals and families in the West Georgia area with debt relief, and we can help you too. Call us today at 770-834-0295.