Foreclosures and CARES Act

Due to the coronavirus pandemic, Georgians have been struggling with a rise in unemployment. For many people, this financial hardship causes uncertainty around how to pay for their homes. The CARES Act seeks to remedy the risk of foreclosure for people dealing with unemployment caused by the pandemic and the subsequent economic crisis.

If you’re a Georgia resident looking to avoid foreclosure on your home, we can help you here at H. Lehman Franklin, P.C.

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Can I Defer My Mortgage Payment Through the CARES Act?

With the economic hardship of recent months, mortgage payments may be more than you’re able to handle. Through the CARES Act, however, borrowers have the potential to defer their mortgage payments to avoid foreclosure.

In order to have your mortgage payments deferred, your mortgage must be federally backed. This means that it needs to be through a major federal mortgage organization such as:

  • Fannie Mae
  • Freddie Mac
  • USDA
  • FHA
  • VA

This will allow you to defer your mortgage payments for a short time to help you face more immediate day-to-day challenges.

Once your mortgage deferral has expired, you are responsible for making up for the deferred payments.

These payments may cover a period of at least six months and your mortgage company has no obligation to offer loan modification. If you aren’t able to meet your payments after deferral, your mortgage company may initiate a foreclosure proceeding.

How Does Foreclosure Work?

Foreclosures in Georgia can happen very quickly, largely because Georgia is a “non-judicial foreclosure” state. That means that your lender isn’t required to appear before a court before foreclosing on your home if the loan documents grant that power to the lender. Most mortgage companies include that language in the documents.

The steps of the foreclosure process are:

  1. The borrower must first default on the mortgage.
  2. The borrower is sent a foreclosure notice by certified mail.
  3. The published notice of the foreclosed house is provided four weeks before the foreclosure.
  4. On the day of foreclosure, a foreclosure sale is held at the court where the property is located. The mortgage company and/or third parties will bid to take ownership of the property deed. In many cases, the mortgage company becomes the owner of the property at the foreclosure sale.

Can I Keep My Home If I Declare Bankruptcy?

If you’re looking for a way to keep your property while also finding a path out of your debt, bankruptcy can be an option. The main bankruptcy chapters include:

  • Chapter 13 Bankruptcy is for people who have a steady income and want to pay off their debt in manageable chunks over time.
  • Chapter 7 Bankruptcy is for people who can’t currently pay off their debt but may be willing to liquidate some of their assets, although liquidation does not often occur.
  • Chapter 11 Bankruptcy is for businesses and consumer debtors with lots of assets to consider. There are special provisions for individuals or corporations that qualify as small business debtors, which can make the Chapter 11 process quicker and easier.
  • Chapter 12 Bankruptcy is a unique type of bankruptcy for family farmers and fishermen.

The main chapters you will likely be looking at are Chapter 13 and Chapter 7. Both of these options can allow you to maintain ownership of your house, but which you choose really depends on your unique financial situation.

If you currently have a job, Chapter 13 may be a safer way to ensure that you maintain ownership of your house.   A Chapter 13 case can provide a structured payment plan to allow you to catch up on delinquent mortgage payments over time while continuing with the regular monthly payments.

While liquidation does not always occur, Chapter 7 might be a better choice for borrowers who are facing hardship due to unemployment.

Meet with Our Bankruptcy Lawyers Today

If you’re having difficulty meeting your mortgage payments due to hardship from the coronavirus pandemic, H. Lehman Franklin, P.C., can help.

We are a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code. We provide federal debt restructuring help. To see if we can take your case, just schedule a free consultation with our bankruptcy lawyers today!