Can Bankruptcy Stop Foreclosure in New York City?
Many people in New York City facing foreclosure will find help by filing for foreclosure. In fact preventing foreclosure is one of the most common reasons for filing bankruptcy. By law, your foreclosure will be instantly stopped through bankruptcy’s “automatic stay” provision which halts any and all creditor action against you. No other action is required; once you file the case the automatic stay goes into effect for both Chapter 7 and Chapter 13 filings.
The automatic stay will allow you to buy some time to deal with your imminent foreclosure. Depending on your goals for the home and your life after bankruptcy your attorney may advise filing either Chapter 7 or Chapter 13. The automatic stay in a Chapter 7 could give you the time to find other housing, or if you’re lucky could give you the time to find the money you need to save your home, but Chapter 7 will not stop foreclosure indefinitely. If you want to save your home the most protection will usually come from filing Chapter 13 in New York City. Chapter 13 gives you a period of 3-5 years to repay your mortgage debt in a court monitored repayment plan. You will be able to address your mortgage arrears and your payments going forward, and you will have your other toxic debts like credit card bills and medical debts eliminated in the process. Chapter 13 is a “wage earners” plan so to qualify you will need to have enough income to cover the plan’s payments each month. Once the bankruptcy court approves your Chapter 13 plan the lender will not be able to foreclose on your home as long as you continue to make your plan payments.
Every bankruptcy case is different. Bankruptcy will provide a number of options depending on your overall debt situation. If you are behind on your mortgage then you’re almost certainly behind on your other bills as well. Medical bills, credit card debt, and student loans are usually adding to the problem. If taken full advantage of filing bankruptcy will reduce or eliminate all of your debts, but you need to work with a qualified attorney familiar with both Chapter 7 and Chapter 13 filings. It may be in your best interest to file a Chapter 7, and then convert to a Chapter 13 midstream, or to even file a Chapter 7 closely timed with a Chapter 13 to get the benefits of both (Chapter 20). If you’re not working with an attorney familiar with the intricacies of both Chapter 7 and Chapter 13 filings in New York City then you could be hurting your chances. Many firms in New York are interested in cranking out as many Chapter 7 cases as possible, and may not be willing to explore a potential client’s additional options.
The “Automatic Stay” provision with a coordinated bankruptcy strategy can solve any problems you may be having with foreclosure. If you are underwater on your bills and facing a foreclosure you can find instant relief through the bankruptcy process. Bankruptcy is not for everyone in debt and there are some consequences, but most people are relieved to learn the pros will almost always outweigh any cons to filing if you need to save a home. If you live in New York City contact the Law Offices of William Waldner online or at 212.244.2882 to arrange a free consultation today. We only practice bankruptcy law and maintain a 99% Chapter 7 bankruptcy discharge record in New York City as of 8/31/16.
**** DISCLAIMER: This article is intended for educational purposes only. By reading no attorney-client relationship has been created. Prior results do not guarantee a similar result for future clients.