American Churches are Facing a Record Number of Foreclosures

American churches are facing foreclosure at a record pace this year, as hundreds of churches continue to experience the consequences of the burst of the housing bubble in 2008.

According to a report from, the number of churches that have had to close their doors due to an inability to pay their mortgages has risen exponentially in the last few years.

And the number of church foreclosures may continue to grow, as banks that were once reluctant to foreclose on churches begin to lose their patience with religious borrowers.

Church Foreclosures Increase Dramatically

Sources indicate that church foreclosures have become increasingly troublesome for American congregations:

  • Loan defaults. According to sources, since 2010, 270 churches have been sold after a loan default. Of these sales, roughly 90 percent were caused by a bank foreclosure. This represents a huge jump over the number of loan default sales in previous years, as only 138 occurred in 2011, and 2008 saw only 28 church sales from loan defaults.
  • Risky lending. Sources say that churches across the U.S. took advantage of the boom in housing prices in 2007 by taking out extra loans for facility expansion projects. When the value of church properties started to plummet, the churches began to bleed money.
  • Rise in bankruptcies. In addition to the higher number of foreclosures, churches are also filing for bankruptcy more often than they were three years ago. As donations drop and the value of their properties are lowered, many churches are facing serious financial constraints.

Unfortunately, the rise in church foreclosures mirrors a similar rise in the number of individual Americans who are facing the loss of their homes. These homeowners, however, do have some options.

Bankruptcy May Stop Home Foreclosure

One potentially powerful tool to stop home foreclosure is Chapter 13 bankruptcy. When most people file for Chapter 13, they immediately receive the benefits of the automatic stay.

The automatic stay will delay foreclosure proceedings against a home. Thus, a filer may be able to stay in his or her home while working for several months to repay a mortgage debt through a consolidated debt plan.

Chapter 13 is not always a magic cure for foreclosure, but it may be able to delay foreclosure proceedings and ultimately defeat them if the filer is able to make up for lost payments.

Most Chapter 13 cases last between three and five years, which is the usual period of time for which filers make monthly payments on their restructured debt payment plans.

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