Will Bankruptcy Stop Foreclosure in New York City?

Will Bankruptcy Stop Foreclosure in New York City?

If your home in New York City is facing foreclosure, filing for bankruptcy can probably help.  Depending on your situation your attorney may advise filing for Chapter 7 or Chapter 13 as both have unique benefits and drawbacks.  Chapter 7 will suspend the foreclosure proceedings, delaying the process significantly so you can have time to work something out with your lender.  Chapter 13 allows many of our clients to save their home outright through negotiated repayment plan, allowing them to catch up on overdue payments in 3-5 years.

An automatic stay is immediately issued upon filing either Chapter 13 or Chapter 7.  This court order forces your creditors to halt any and all of their collection efforts.  If your home is in foreclosure it will postpone the process until your bankruptcy is finalized.  The stay however will be terminated upon conclusion of your case giving you as little as 3-4 months to negotiate with your lender or to catch up on back payments if you are filing for Chapter 7. Sometimes the mortgage lender will motion to lift the automatic stay, and if they are successful the foreclosure process will be back on in as little as two weeks.  Oftentimes keeping a home is not what our client’s are hoping to do, instead they need to find a way to deal with their distressed second or third mortgages, and Chapter 7 will wipe out any past due payments in this case.

However, most of our clients will do anything they can to keep their home.  Filing Chapter 13 is usually the best way to keep a home if there is no end in sight to your debt trouble, but you will need to have some income in order to qualify.  In a Chapter 13 case your attorney will create a re-payment plan with your creditors that will last 3-5 years.  This payment plan can include your mortgage, and will allow you to catch up on past due payments while staying in your home.  Chapter 13 is a more involved process than Chapter 7 but if you have the income to resume your mortgage payments upon completion of your bankruptcy and the ability to make additional monthly payments to the bankruptcy trustee for the past due mortgage amounts then you will be able to stop a foreclosure and save your home.  Remember also that since other toxic debts like credit cards and medical bills are also reduced or eliminated in a Chapter 13 plan you will have more available money each month to successfully make these home payments.

There are many other things to consider when filing either Chapter 7, or Chapter 13 that you will need to discuss with your attorney.  Foreclosure can be stopped but neither Chapter 7 nor Chapter 13 is guaranteed to save every home.  Even if your home can’t be saved by filing bankruptcy the process can still rid you of any toxic mortgage debts or tax liabilities.  It will also eliminate other toxic unsecured debts which can help you immensely for the rebuilding period ahead.  If you are expecting a foreclosure in New York or already in the process please contact the Law Offices of William Waldner online or at 212.244.2882 to arrange a free consultation.  We offer affordable bankruptcy assistance for all New Yorkers 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 this article no attorney-client privilege has been created.

William Waldner