Georgia is a “non-judicial” foreclosure state. This means that the mortgage company lender can foreclose on your house without filing a lawsuit or having to go to court. The requirement under Georgia Law is for the lender to send a notice at least 30 days before the foreclosure sale date. In Georgia, foreclosure sales are scheduled on the first Tuesday of each month.
When a bankruptcy case is filed, an “automatic stay” is immediately put in place. An automatic stay is an injunction that stops all creditors from collection activity. 11 U.S.C. § 362. This “stay” automatically begins at the moment a bankruptcy case is filed. A foreclosure is a means of collection by the mortgage lender. Thus, when a bankruptcy case is filed, the automatic stay stops the foreclosure sale.
It is important to note that the automatic stay doesn’t work in multiple cases. More specifically, if it is your second bankruptcy case within a year (not calendar year but in the year counting back from the date of your most recent filing), then the automatic stay expires after 30 days. 11 U.S.C. § 362(c)(3). Thus, you would have to file a Motion to Extend the Automatic Stay and obtain an order for the stay to continue during your bankruptcy case. If it is your third case within a year, then there is no automatic stay, thus, if you have a foreclosure sale and it is your third filing within a year, then it will not stop the foreclosure sale. 11 U.S.C. § 362(c)(4).
Any bankruptcy filing will stop a foreclosure sale due to the automatic stay. However, it is important to note the difference and which Chapter will help you to retain your house.
Chapter 7 Bankruptcy
Filing a Chapter 7 bankruptcy will only stop and delay the foreclosure sale. Since a Chapter 7 bankruptcy does not allow for you to catch up on the mortgage arrears, the mortgage company will almost immediately file a Motion for Relief of the Automatic Stay in order to get out of your bankruptcy case and start the foreclosure process again.
Chapter 13 Bankruptcy
Filing a Chapter 13 bankruptcy will stop the foreclosure sale and will get you on a payment plan to pay back your mortgage arrears. Thus, it allows you a payment plan for the mortgage payments you got behind on but you will have to start making your regular mortgage payments along with the payment plan.
At Hong & Sessions Law, LLC, attorney Soo Hong has assisted clients for over 10 years in helping to save their home from a foreclosure sale. If you are facing a foreclosure sale, contact us today for a free consultation.