The Rise in Foreclosures: Why Acting Early Saves Your Home and Your Money

The national housing market continues to face mounting pressure. According to the latest data from ATTOM, there were 40,355 U.S. properties with foreclosure filings in May 2026. While this reflects a 5 percent decrease from the previous month, it represents a 14 percent increase compared to the same time last year. However, during the first quarter of 2026, it represents a 26 percent increase when compared to the same period in 2025.

This ongoing year-over-year growth suggests that many households are still feeling the strain of elevated mortgage rates, rising ownership costs, and persistent affordability constraints. This is most evident in the Southeast states of Alabama, Georgia, Mississippi, and Tennessee which is known as the “bankruptcy belt.”

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

Key Takeaways

• Rising Foreclosure Activity: Foreclosure filings in May 2026 showed a 14% year-over-year increase, and Q1 2026 saw a 26% jump compared to the same period in 2025.
• The High Cost of Delay: Waiting to act allows late fees, property preservation charges, and lender legal costs to accumulate, all of which must be repaid through a Chapter 13 plan.
• The Costs of Hiring a Bankruptcy Lawyer: Filing early may allow for a minimal initial retainer, whereas emergency filings often result in increased upfront retainers due to the compressed timeline and increased attorney risk.
• Chapter 13 vs. Chapter 7: While both offer an automatic stay under §362, only Chapter 13 under §1322(b)(5) allows to “cure and maintain” a mortgage by repaying arrears through the bankruptcy plan.
• Strategic Advantage: Early intervention provides your bankruptcy attorney with the necessary leverage to explore alternatives, such as loan modifications, before the foreclosure escalates into a costly lawsuit.

States with Highest Foreclosure Rates (May 2026)

The foreclosure crisis is not distributed evenly across the country. As the following data from May 2026 illustrates, certain states are seeing significantly higher rates of foreclosure activity, with specific counties driving these trends.

State	Foreclosure Rate	Top Affected Counties
Florida	1 in 2,110	Hamilton, Charlotte, Hendry, Osceola
South Carolina	1 in 2,287	Kershaw, Union, Richland, Greenwood
Maryland	1 in 2,369	Baltimore City, Charles, Allegany, Dorchester
Nevada	1 in 2,386	Lyon, Clark, Mineral, Nye
Indiana	1 in 2,516	Lake, Grant, Vermillion, Perry
Utah	1 in 2,576	Garfield, Tooele, Sevier, Sanpete
Arizona	1 in 2,579	Pima, Pinal, Mohave, Cochise
Delaware	1 in 2,780	Kent, New Castle, Sussex
New Jersey	1 in 2,836	Salem, Cumberland, Camden, Sussex
Illinois	1 in 2,869	Mason, Dewitt, Clay, Ford

Source: ATTOM Data, May 2026.

Saving Your Home from Foreclosure with Chapter 13 Bankruptcy

Many homeowners view bankruptcy as a last resort, but from a strategic and financial perspective, if the goal is to keep the home, delaying action often makes the situation worse.

Once a Chapter 13 petition is filed, the automatic stay under §362 of the Bankruptcy Code immediately halts the foreclosure process. The automatic stay also stops most lawsuits, collection actions, and enforcement efforts such as wage garnishments, giving homeowners critical breathing room.

The automatic stay also stops the foreclosure action with a Chapter 7 filing, but Chapter 7 does not provide the ability for homeowners to catch up on their missed mortgage payments like Chapter 13. In addition, it’s common for mortgage lenders to seek to “lift the stay” when Chapter 7 is filed, further limiting the amount of time a homeowner can reside in the property.

With Chapter 13, under §1322(b)(5), a debtor may “cure and maintain” a long‑term mortgage by repaying past‑due amounts through the Chapter 13 plan while continuing regular monthly payments going forward.

Note on Non-Judicial Foreclosure States

 A frequent misconception is that non‑judicial foreclosure states somehow prevent homeowners from disputing a foreclosure. That is not accurate. Non‑judicial procedures simply accelerate the timeline, but they do not eliminate a homeowner’s rights.

Borrowers may still challenge a foreclosure in civil court, assert defenses under state law, or seek the protections of Chapter 13 bankruptcy. Non‑judicial foreclosure changes the process, not your rights.

The Hidden Costs of Delay

A common and expensive mistake in foreclosure cases is failing to act promptly. Many homeowners are served with a foreclosure summons and, instead of retaining a foreclosure‑defense or bankruptcy attorney, they continue negotiating directly with the lender while the foreclosure lawsuit moves forward. This delay reduces available legal options and increases the total amount needed to save the home.

Foreclosures progress quickly, and waiting to respond not only increases the risk of losing the property but also raises the Chapter 13 plan payment amount. Each additional month of delinquency adds more than just missed mortgage payments, it also triggers late fees, property inspection charges, property preservation fees, and other related costs.

As the foreclosure advances, the lender’s attorney’s fees and court costs are added to the debt as well. Under §1322(e), the amount necessary to cure a mortgage default includes all fees and costs related to the foreclosure. And for oversecured creditors, §506(b) allows recovery of reasonable attorney’s fees provided for in the mortgage.

In practice, this means every procedural step the lender takes, motions, hearings, service costs, ultimately becomes part of the arrearage the homeowner must repay through the Chapter 13 plan.

Increased Bankruptcy Attorney Fees

Delay also increases the upfront cost of filing bankruptcy. When a homeowner seeks help early, before a foreclosure sale is imminent, most bankruptcy attorneys accept a modest initial retainer because the remaining fees can be paid through the Chapter 13 plan. It is common for a homeowner who is behind on payments but not yet in active foreclosure to begin a Chapter 13 case with a retainer as low as $500.

However, when a foreclosure sale is only days away, the attorney must prepare an emergency petition, gather documents immediately, and potentially file motions to stop the sale. This compressed timeline typically requires a substantially higher upfront payment, often $2,000 to $2,500, because the attorney must prioritize the case and complete significant work before filing.

In addition, a bankruptcy attorney has no guarantee that the debtor will make timely plan payments, avoid dismissal, or refrain from using the filing merely to buy time before selling the property. Because Chapter 13 fees are often paid through the plan, counsel assumes a degree of risk, particularly when the case is filed under urgent, foreclosure‑driven circumstances.

Acting early preserves legal options, reduces costs, and ensures your attorney has the time and leverage needed to protect your home effectively, and ultimately saves you money.

Conclusion: Acting Quickly When Facing Foreclosure

The steady rise in foreclosure activity across the country underscores a simple truth: time is the most valuable asset a homeowner has when facing mortgage distress. Foreclosures are governed by strict timelines, escalating costs, and creditor‑friendly statutes that allow lenders to add fees, charges, and attorney’s fees to the balance owed. With each passing day, the foreclosure becomes more expensive.

Chapter 13 bankruptcy remains one of the most powerful tools available to homeowners seeking to preserve their property. The automatic stay stops foreclosure instantly, and  allows homeowners to repay mortgage arrears over time while keeping the home.

But these protections are most effective when invoked early, before additional fees accrue, before the lender advances the foreclosure, and before emergency filings become necessary.

Educational Resources

• For Institutions: Colleges and universities can purchase or request examination copies of my textbook directly from Routledge Publishing.
• For Students & Practitioners: Single print and digital copies are available via Amazon Books.
• Video Lectures: Stream comprehensive legal breakdowns and video explanations on the Prof. Hernandez YouTube Channel.

Bankruptcy Court & Consumer Resources

Explore a deep dive for consumer guides and court directories to navigate your legal options:

• A step-by-step master guide on Filing for Bankruptcy and Navigating the Petition.
• Access full directories for the Federal Bankruptcy Court System and Trustee Contact Information.
• Protect your assets by reviewing your specific State Bankruptcy Exemptions or compare them against the Federal Bankruptcy Exemptions.
• Prepare for your court date with the updated brief on the 341 Meeting of Creditors Rules and Procedures.

Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.

Bankruptcy Code References

• 11 U.S. Code §362 – Automatic stay.
• 11 U.S. Code §1322 – Contents of plan.
• 11 U.S. Code §330 – Compensation of officers.
• 11 U.S. Code §1326 – Payments.