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Alabama home foreclosures on the rise

It has been several years since the nationwide housing bubble burst, but many Alabama homeowners continue to struggle. A new report shows many Alabama families falling behind in their efforts to delay or stop foreclosure. Bankruptcy could be a way to help them overcome their financial challenges during a time when fresh starts are invaluable.

According to RealtyTrac, first-time foreclosure notices rose 5.52 percent in Alabama in January. Completed foreclosures rose 5.37 percent. Both figures had fallen in December, showing the fluctuation and uncertainty in Alabama's current market. The state had a total of 1,570 properties in the foreclosure process in January, according to the report. This figure translates to one out of every 1,3777 homes experiencing financial tumult near the start of the year.

Chapter 13 bankruptcy can be a legal sail in a tough economic storm, however. The advantage to filing for Chapter 13 bankruptcy is that it allows people to pay off their debts without losing their homes. Some forms of bankruptcy require debtors to sell almost everything they own in order to pay off their creditors as soon as possible, but Chapter 13 sets up a payment plan that can generally last three to five years.

Not everyone qualifies for Chapter 13, however. There are limits to how much and what kinds of debt can be covered by the plan. Those who file must undergo credit counseling from a government-approved agency as part of their repayment plan. For those who can show that they are unable to pay, though, these agencies are required to provide the service at low cost or no cost

The repayment plan does require hard work and patience, but it will stop creditor harassment and put people on track to get out of debt without losing their homes to foreclosure. Filing for Chapter 13 can be a powerful boost out of January's dreary foreclosure statistics.

Source: Birmingham Business Journal, "Alabama home foreclosures rise in January," Ryan Poe, Feb. 15, 2013

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