Foreclosures in Alabama Increasing
Although Alabama still has the 18th lowest foreclosure rate in the country, this uptick indicates that residents need to know what they can do to protect themselves.
January 29, 2013
Foreclosures in Alabama increasingThe Alabama foreclosure rate jumped in 2012. According to RealtyTrac, between the months of November 2011 and November 2012 foreclosures in the state reached 2,194 -- a 22 percent increase. The foreclosure filing rate in Alabama in November 2012 was one in 990 homes. Although Alabama still has the 18th lowest foreclosure rate in the country, this uptick indicates that residents need to know what they can do to protect themselves.
More people are buying foreclosed homes
Foreclosed properties are often sold at a hefty discount; on average, foreclosed homes in Alabama averaged $104,700, or 33 percent less than the median price of an Alabama home. In Alabama, foreclosure sales increased by 33 percent in the third quarter. Lower home prices on foreclosed properties may have allowed some people to qualify to buy a home that would have been out of their price range in previous years. RealtryTrac reported 996 sales of properties in foreclosure in the third quarter of 2012, accounting for about 16 percent of all homes purchased in Alabama.
This trend was also apparent throughout the nation. Foreclosure sales made up about 20 percent of all home purchases across the country. The average savings to home buyers was similar to that of Alabama residents; the average national purchase price was higher, at $177,430. According to RealtyTrac, most of these sales were in pre-foreclosure. A pre-foreclosure sale, on for which the bank agrees to a price that is less than the current owner's mortgage, are usually called short sales.
What options do owners of distressed properties have?
In spite of recent economic gains, many property owners remain in distress and continue to struggle to make their mortgage payments. However, these borrowers do have options. Some, for example, might choose to file for bankruptcy. For those who decide bankruptcy is their best recourse, an automatic stay goes into effect on all debt collection efforts as soon as the bankruptcy paperwork is filed. Under an automatic stay, creditors are no longer allowed to contact debtors. The automatic stay also puts a stop to foreclosures, repossessions and property sales.
Be aware, though, that automatic stays are only temporary. After the bankruptcy case has been settled, collection efforts may continue. For example, secured creditors such as mortgage servicers have the right to continue their collection efforts if the borrower stops making the payments they agreed to in their bankruptcy settlement.
There are two different kinds of bankruptcy for consumers -- Chapter 7 and Chapter 13. Under Chapter 7 bankruptcy, shortly after filing the borrower must declare whether they will purchase the property from the lender, return the property or enter into a Reaffirmation Agreement to exclude the property from the bankruptcy and agree to continue making payments for it. In Chapter 13, debts are usually reorganized and payments recalculated, allowing the borrower to keep their home as long as payments are made.
Is bankruptcy right for you?
An experienced bankruptcy law attorney can help you answer that question. And if you do decide to file for bankruptcy, this legal advocate can help explore the best debt relief option for you.
Article provided by Marshall A. Entelisano, P.C.
Visit us at http://www.entelisanolaw.com/