Falling behind on your mortgage in New York due to debt can be overwhelming, facing late notices and foreclosure threats. While many debtors fear losing their homes, bankruptcy can be utilized to strategically safeguard them. However, the result depends heavily on the bankruptcy type, arrears, equity, and earnings. Please continue reading to learn how to safeguard your home and regain financial stability. Connect with an experienced Rockland County Foreclosure Defense Attorney who can help explore your options.
Will Bankruptcy Stop Foreclosure on My House?
Although bankruptcy is often wrongly perceived as punishment for “failure,” this legal process can provide a much-needed financial fresh start. Bankruptcy can halt foreclosure, allowing you to catch up on your mortgage or permit walking away from an unaffordable home without debt hanging over your head. A knowledgeable Rockland County bankruptcy attorney can help you understand your options and potential risks.
Filing for bankruptcy in New York automatically enacts the automatic stay. This is a court order that temporarily stops collection efforts, including foreclosure proceedings. This provides homeowners with immediate relief, as lenders cannot continue to harass them or continue with sales while the stay is active.
Nevertheless, the automatic stay will not resolve any missed payments. Lenders have the right to file a motion for relief from the stay, requesting the bankruptcy court to allow foreclosure to resume if payments are not made or no plan is established. The court’s decision depends heavily on the case and the bankruptcy chapter. A Rockland County bankruptcy attorney can evaluate your position and advise on maintaining the stay.
Can I Keep My House in Bankruptcy If I’m Behind on the Mortgage?
If you opt for Chapter 7 bankruptcy, it can wipe out most unsecured debts. However, it is not designed to save a delinquent mortgage. This means the lender can still foreclose once the process has concluded unless you catch up on payments. By eliminating other debts, though, it could potentially ease mortgage affordability.
Chapter 13 is typically more effective for addressing mortgage arrears. In a Chapter 13 case, you can keep your house, which will cure missed payments. With this option, you propose a 3-5 year plan to resume regular payments and satisfy outstanding arrears over time. If your income allows for it, Chapter 13 can offer the best opportunity for keeping your home.
As you can see, filing for bankruptcy does not necessarily mean you will lose your home. Given the complexity, it is in your best interest to consult an attorney at The Lauterbach Law Firm. Our legal team can help determine whether keeping your home is viable, which chapter is best, and what immediate steps you should take.
