Should I File For Bankruptcy Before or After Foreclosure in New York?

In today’s turbulent economic times many Americans still have extremely depressed home values after the collapse of the housing bubble.  A lot of people are underwater on their home loans owing considerably more than the home’s current market value.  Unmanageable credit card debt often follows suit when people have trouble paying for a home.  Completely maxed out, eventually our clients are faced with an inevitable home foreclosure.

A common misconception abounds that you should wait to file for bankruptcy until your home is already being foreclosed on.  There is actually nothing in the Bankruptcy Code that prevents a consumer from filing for bankruptcy before being foreclosed on, and if given the choice many people will benefit more if they file for bankruptcy first.

Sadly, many of our potential clients in New York lose their homes before even consulting with an attorney about their options.  It doesn’t have to be this way, but many clients don’t know bankruptcy can save their home or stop any active foreclosure proceedings.  There are different strategies, but basically when you file for bankruptcy an “automatic stay” is imposed that will stop any and all collection actions from your creditors including foreclosure.   While your case is tied up in Bankruptcy Court you will have the opportunity to save money by not having to pay on your mortgage.  Most banks will wait out the bankruptcy process before even attempting to restart the foreclosure proceedings which will buy you some valuable time and give you and your attorney a chance to form a plan on what to do about keeping your home.  When it is important to our clients we have always found a way to save their homes through bankruptcy.  There are powerful legal ways to do this through New York Bankruptcy law and the New York State exemptions but you need to consult an attorney about your specific debt situation.

When considering bankruptcy you have to look at the big picture more than focusing on any one single debt, even a home mortgage.  If you realistically cannot pay your debts, see a foreclosure coming and don’t see your income situation improving soon, then you really should speak to an attorney about bankruptcy before making another mortgage payment.  Bankruptcy is a powerful debt relief tool that will leave you, not your lender, in control of your home’s future.

If you live in New York, get the pros and cons of bankruptcy for your case from the Law Office of William Waldner.  We will explore the best way to handle a pending or active foreclosure, and will do everything we can to keep you in your home if that is part of your post-bankruptcy goals.  Arrange a free consultation online or by calling 212-244-2882.  We are a small, personalized firm that offers affordable debt relief assistance for all New Yorkers.  We have a 99% Chapter 7 bankruptcy discharge record in New York City as of 8/31/16, and know what to expect with every case we file.

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