Could my New York City House or Co-Op Get Foreclosed on in Bankruptcy?

If you have fallen behind on your mortgage payments your house or co-op in New York City could be at risk of foreclosure.   Unless you can come up with the overdue mortgage payments and find a way to start making the payments going forward you are left with only two possible options to save your home: mortgage modification or bankruptcy.  Considering the lack of success the modification programs have had to this point, it’s not surprising more people are turning to bankruptcy as the best way to save a home in danger of foreclosure.

New York City is among very few places in the country that has mortgage modification programs built into the bankruptcy process.  Both the EDNY (Eastern District New York), and the SDNY (Southern District New York) have loss mitigation programs designed to help bankruptcy filers find a way to prevent foreclosure by forcing their mortgage lenders to work with them more easily.  The outcome is not guaranteed, but the program makes your lender come to the table with your attorney to try to make a deal.  The lender has to meet strict deadlines set by the court that if missed will mean an automatic modification for your mortgage.  Working though the bankruptcy court instead of on your own prevents some of the games that have stopped people from getting the modification they deserve, but were unable to get without the power of the bankruptcy court behind them.   People filing bankruptcy in New York City are very fortunate to have these programs that combine the benefits of mortgage modification and bankruptcy relief into one process.

Your bankruptcy attorney will have different strategies in place depending on whether or not the home is your primary residence or an investment property, how much equity exists, and how many mortgages you have on the home.  Generally speaking, if we need to save your house or co-op in a bankruptcy we will help you file for Chapter 13 protection.  Chapter 13 can help get you into the court run loss mitigation programs and has many other powerful benefits towards saving a home.  For example, Chapter 13 can help you entirely eliminate any second or third mortgages, and even reduce a first mortgage if the home or co-op is an investment property.  With a Chapter 13 the foreclosure process is instantly stopped giving you a chance to repay mortgage arrears over 3-5 years.  Your attorney will also have more power to challenge the bank’s right to foreclose on your property, and may even be able to challenge the bank’s claim of ownership in certain Chapter 13 cases.

Many clients try unsuccessfully to modify their mortgage loans for months before seeking the advice of a bankruptcy attorney.  Their house or co-op is often on the brink of foreclosure when we see them for the first time.   We help people on the edge of losing their home every day, and know how to force mortgage lenders to the negotiating table.  If you are underwater on your house or co-op and would like to learn more about how bankruptcy can help your situation, contact the Law Offices of William Waldner online or at 212.244.2882 to arrange a free bankruptcy consultation today.  We only practice bankruptcy law and maintain a 99% Chapter 7 Bankruptcy discharge record in New York City as of 8/31/16.

This article is intended for educational purposes only.  By reading no attorney-client relationship has been created.