The rise of the COVID-19 pandemic has unleashed a tsunami of financial worries for everyone, from businesses to the average citizen. In addition, the uncertainty of what may or may not happen left many homeowners asking questions about foreclosure and their options in bankruptcy.
People want to know about the foreclosure process and if bankruptcy can help them save the roof over their heads. In several cases, bankruptcy can help avoid foreclosure. First, however, you should be familiarizing yourself with the factor that may impact the effectiveness of bankruptcy in foreclosure during the COVID-19.
Types of Bankruptcy that Can Help with Foreclosure
The United States Bankruptcy Code has two main types of proceedings that can help you file for bankruptcy to avoid foreclosure during the COVID-19. However, you should get help from a licensed bankruptcy attorney once you have learned. If you are in the state of New York, you can search online for terms such as
- Brooklyn Bankruptcy lawyer
- Westchester bankruptcy lawyer
- Yonkers bankruptcy lawyer
- White Plains Bankruptcy Lawyer
Contact The Law Office of William M. Waldner to get help understanding your options in Chapter 7 and Chapter 13 bankruptcy.
Bankruptcy Chapter 7 and How it Can Help with Foreclosure
Chapter 7 bankruptcy is also known as the “liquidation bankruptcy.” Most filers think of this Chapter for bankruptcy when considering bankruptcy to avoid foreclosure. When you file for bankruptcy under Chapter 7, you may have to liquidate your non-exempt assets to pay back the creditors.
In most of the cases filed under chapter 7, the assets of the filer that are exempt or non-exempt are usually too nominal. This means they cannot justify being liquidated because the amount to sell these assets will not be enough to pay back one or more creditors.
Therefore, the trustee assigned to your case may sell your house. In this case, you as a debtor may claim an exemption on a certain percentage of the sale’s amount. For instance, the homestead exemption amount in the state of New York ranges from $179,975 for debtors living in Kings, Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester and, Putnam counties to $89,975 for Debtors in most other counties. Please note that Debtors living in Dutchess, Albany, Columbia, Orange, Saratoga, and Ulster counties are entitled to a homestead exemption of $149,975. Additionally, these numbers can be doubled for married couples filing a joint bankruptcy case. Please note that these numbers change over time and are accurate as of January 2022.
Another benefit of filing under Chapter bankruptcy law, you will get something known as “automatic stay” granted by the bankruptcy court. This stay acts as the court’s legal order to prevent any and all creditors from pursuing further legal actions against your property and you. This includes taking any actions to start foreclosure proceedings.
The automatic city will allow you to have enough time to work out some kind of arrangement with the mortgage provider to keep the roof over your head. That said, this workout will be voluntary with your mortgage provider.
In the Southern District of New York Bankruptcy Court there is also a loss mitigation program to help people save their homes and modify their student loans while in Bankruptcy proceedings.
Bankruptcy Chapter 13 and How it Can Help with Foreclosure
This is your second option in case chapter 7 is not a viable solution to the problem. Chapter 13 bankruptcy is also referred to as a “reorganization bankruptcy.” Filing under bankruptcy chapter 13, you will work out a monthly payment plan with your creditors for a duration of 3 to 5 years.
You will be able to keep all your assets regardless of their exempt or non-exempt status, including your home. In Chapter 13 Bankruptcy you pay back a portion of your debt each month.
However, you have to remember that you can even still pursue a modification in your loan by working out a deal with your mortgage provider. You can either do it yourself or, in many cases, and it can be done via a mediation program held by the court for the creditor and debtor to come to a mutual agreement.
Once the court proceedings are over and you agree to a payment plan, you will have to ensure that you make the payments on time. As far you follow this simple rule, you will be able to pay back your eligible debts while keeping your home. However, you will have to speak to an Bankruptcy attorney in NYC.
Contact Bankruptcy Lawyer in New York
If you are considering filing for bankruptcy to prevent foreclosure in the state of New York, then we at The Law Office of William M. Waldner can help. Contact our lawyer with expertise in bankruptcy and garnishment in New York today and discuss your specific situation.