With the recent housing crash and poor job market many Debtors are having trouble keeping their homes and risking foreclosure. My office is seeing an increasingly number of underemployed people coming in to my office ever day. Because of policies enacted by our government more and more employers are finding it very difficult to pay for full time employees and overtime. As a result more people are forced to have several lower paying jobs to make ends meet. Many people have also lost their jobs, fallen behind on their mortgages and now just finding new jobs that would give them the income to pay their mortgages. If you are close to foreclosure your option is to pay off your entire mortgage immediately or loose your home.

The good news is that in NYC homeowners have the option of entering what is called the loss mitigation program in Bankruptcy. The loss mitigation program forces Banks to come to the table and negotiate a mortgage modification to people who are behind on their mortgage or even facing foreclosure. The court mandated program is overseen by a federal judge in each case and if the bank does not cooperate they can be sanctioned or worse. Even more important there is an automatic stay and the mortgage company cannot foreclose while someone is in loss mitigation.

Some people in Bankruptcy do not need loss mitigation but instead just need time to get caught up with their mortgage. Chapter 13 allows debtors to pay back their mortgage arrears over 3 or 5 years without consequence. So if you are behind $20,000 on your mortgage a chapter 13 filing can stop all action that is being taken by the bank to take your home and force the bank to give you up to 5 years to pay back the $20,000 through Chapter 13.

Another huge bonus is the lien stripping provision in Bankruptcy. A second or third mortgage can be completely wiped out in Chapter 13. If the home’s value is lower than the amount owed on the first mortgage a motion can be filed in Chapter 13 proceedings getting rid of all other mortgages on the home other than the first.

There are many other advantages of filing for Chapter 13 but if you are in New York City and at risk of loosing your home to foreclosure act now and contact my office at 212-244-2882.