Saving a Foreclosure by Filing Bankruptcy
Often times debtors in New York and New Jersey wonder how filing Bankruptcy can help them if their house is in foreclosure and there is a sale date nearing. There are many advantages to filing bankruptcy. There are different options available to debtors who are facing a foreclosure in Bankruptcy. An experienced New York and New Jersey bankruptcy lawyer can go over the different options that may be available to you.
When an individual files for bankruptcy an Automatic Stay is initiated. The Automatic Stay prevents creditors from coming after them. This means that once the Bankruptcy proceeding has initiated creditors, such as mortgage lenders are required to cease any foreclosure or collection activity. If a creditor fails to obey by the Automatic Stay the Bankruptcy Court can impose sanctions. It is important to understand that the Automatic Stay initiated in the Bankruptcy Court can be lifted if a creditor files a motion. When this happens, the Bankruptcy judge has the discretion to decide whether or not they may proceed with any collection activity.
What Can I Do If My Home Will Be Foreclosed?
A debtor who is facing foreclosure has a few possibilities. The first possibility is to leave the foreclosed property and surrender it to the bank. If the debtor decides this option then any unpaid balance to the lender will be forgiven as long as the debtor gets a discharge in the Bankruptcy Court. This is the simplest option and may be a good option for an individual who is “underwater” on their home. If a home is “underwater” this means that the outstanding balance on the mortgage loan is more than what the property is worth.
However, there are some instances where debtors have equity in their homes and want to keep their property. In these circumstances, the debtor may not have paid their mortgage for five or ten years but now has a change in circumstance and is able to pay their mortgage and wants to keep their home.
How Can A Chapter 13 Bankruptcy and A Chapter 7 Bankruptcy Help Me?
In both a Chapter 13 bankruptcy and a Chapter 7 bankruptcy depending on if you reside in New York or New Jersey there are different options. One of those options is to do loss mitigation. Loss mitigation is a process where debtors who are facing foreclosure or are nearing a sale date can apply for a loan modification through the Bankruptcy Court. Many people wonder why they would need to hire a lawyer to do a loan modification through the Bankruptcy Court when they can to them themselves. There are many advantages to using a lawyer and the Bankruptcy Court to help obtain a loan modification instead of doing it without the protection of the Bankruptcy Court. One of the advantages of applying for loss mitigation through the Bankruptcy Court is a judge oversees the entire process. This ensures that the bank will work with you to try and get a modification. Lenders can’t “lose paperwork” or mislead debtors. If the bank approves your loan modification then you can begin making your monthly mortgage payments again. There are different ways that lenders can approve you for a loan modification. One way is to put a balloon payment at the end of the loan. Another way is to include all of the arrears in your monthly payments. Further, an experienced bankruptcy attorney has knowledge dealing with foreclosures and can go over in more detail how this process works and help determine if they believe this is a viable option for you.
There are also instances where debtors have fallen behind on their mortgage but are able to pay their current mortgage and their past arrears. In Chapter 13 Bankruptcy, a bankruptcy attorney can work with you to come up with a plan over 5 years to make monthly payments and bay back your arrears on your mortgage thus, preventing foreclosure.
For answers to this question and more questions about Bankruptcy and Foreclosure, please feel free to contact an experienced New Jersey and New York bankruptcy lawyer. Karra Kingston provides individuals who are looking to save their homes from foreclosure by giving them a free bankruptcy consultation. Karra has used the Bankruptcy Courts to save many homes in both New York and New Jersey that were in danger of being foreclosed. Call us today at (973)-979-9078 or email us at Karra@klkbankruptcylawyer.com.