How Bankruptcy Can Stop Foreclosure in New York
If you cannot afford your monthly mortgage payments on your New York home, the lender will eventually begin foreclosure proceedings to collect the debt. If you don’t act in a timely manner, you could lose your home, and your credit score will tank. This will make it difficult to buy or rent another property in the immediate future.
Fortunately, there are ways to save your home from foreclosure – even if you don’t have any money. Our bankruptcy attorneys in New York don’t want to see good people lose their homes when they’re going through hardship. That’s why we are here to help our clients stop foreclosure and keep their homes.
Is it Possible to Stop Foreclosure in New York?
You have multiple opportunities to stop foreclosure. Some only provide a temporary stop, while others offer a permanent solution. The best approach is to talk to your lender immediately and find a solution that works for both parties. Sometimes lenders are agreeable and sometimes they are not. You will need to be open to all possibilities.
Here are some options you have to stop the foreclosure process.
- Loan modification. You and your lender can negotiate to change the terms of your current mortgage. To make your payments more affordable, your lender may be willing to lower the interest rate or extend the mortgage.
- Deed in lieu of foreclosure. This happens when you agree to turn over your homeownership to the lender to avoid foreclosure. The lender may agree to forgive the difference between your mortgage balance and the value of your home.
- Mortgage forbearance. Forbearance allows you to put a hold on your mortgage payments for a temporary time. It’s intended to help people get back on their feet after going through financial hardship.
Filing Bankruptcy to Stop Foreclosure in NY
Another way to stop foreclosure is to file bankruptcy. Many people don’t consider this option, but they should! By filing bankruptcy in New York, an automatic stay goes into effect. This stay prevents all creditors from taking action to collect any debt you owe.
Chapter 7 bankruptcy can delay foreclosure for a few months and even allow you to keep your home using the homestead exemption. Chapter 13 bankruptcy lets you keep all of your property. However, you will still have to pay for some of it.
Speaking with a bankruptcy attorney in New York will help determine the best way to stop foreclosure.
Chapter 7 Bankruptcy and Foreclosure
Filing Chapter 7 bankruptcy in New York will delay foreclosure proceedings. When you file Chapter 7, an automatic stay goes into effect, forcing creditors to stop their collection attempts immediately. Typically, the postponement usually lasts for 3 to 4 months.
The benefit to filing Chapter 7 bankruptcy is that it can discharge many other debts, such as medical bills and credit card bills. This way, you can free up some money and make your mortgage payments easier to pay each month.
If you decide that you don’t want to keep the home, you can let it go into foreclosure and still file Chapter 7 bankruptcy. Filing bankruptcy will at least give you some time to rent a house or apartment, while still discharging most of your debts.
Chapter 13 Bankruptcy and Foreclosure
Filing Chapter 13 bankruptcy in New York stops foreclosure. This type of bankruptcy develops a plan based on your income to repay some or all of your debts. You can include your mortgage in this repayment plan, which allows you to forget about past due payments. Instead, you’ll make installments for the next three to five years. After this time, any remaining debts will be discharged.
Chapter 13 bankruptcy makes it easier to stay in your home because it stops foreclosure. As long as you make the new payments on time, you can keep your home. After the three-to-five-year mark, most remaining debts will be discharged.
Talk to a Bankruptcy Attorney in NY – Learn Your Options to Stop Foreclosure
If your home is in foreclosure and you want to stop it, speak with a lawyer. It’s best to do this sooner rather than later, as New York does not have a redemption period that allows you to reclaim your home after a foreclosure sale.
The Law Office of William Walder offers free consultations, so contact us today to speak with our bankruptcy lawyers in New York. We’ll be happy to look over your situation and determine the best ways to stop foreclosure.