People in Mississippi who have fallen behind on their mortgage payments face the possibility of foreclosure. While some lenders are open to loan modifications or short sales to satisfy the debt, many are not. Many lenders will begin foreclosure proceedings, which can end with the lender taking possession of the house and selling it at auction. The proceeds of the auction are then used to pay down the mortgage as well as the legal costs associated with foreclosure.

Where the lender is not willing to work with the borrower and forecloses on the property, filing for bankruptcy can protect the borrower. Once a person files for Chapter 13 or Chapter 7 bankruptcy, the court issues an Order for Relief that includes an automatic stay of collections actions. Creditors are then not allowed to attempt debt collection efforts until bankruptcy proceedings are complete. There are exceptions to the automatic stay in cases where the lender has already filed the foreclosure notice and lenders can file motions to lift the automatic stay.

Individuals who file for Chapter 13 bankruptcy set up a repayment plan as part of the bankruptcy process. The plan distributes the filer’s income to creditors, and the filer must account for current and past-due mortgage payments. If the person meets the requirements of the bankruptcy court for the length of the plan, he or she will usually avoid foreclosure and keep the home.

People who are struggling to pay down debts in Mississippi might want to speak with a lawyer. A lawyer with experience practicing bankruptcy law might be able to help by examining the facts of the case and suggesting a Chapter 13 or Chapter 7 bankruptcy filing to restructure or eliminate debts. A lawyer may be able to negotiate new payment terms with creditors or draft and file a bankruptcy petition to trigger the automatic stay.