How Bankruptcy Can Stop Foreclosure

Foreclosure on real estate occurs when a borrower misses several mortgage payments. After following NY guidelines, the lender can then sell the home at auction. If you are a homeowner, and you miss two mortgage payments, speak to an experienced Bronx foreclosure attorney as soon as possible. Depending on your situation, you may be able to declare bankruptcy, and delay the foreclosure process.

Automatic stay

When you file for bankruptcy, an injunction called an “automatic stay” is issued which stops all creditor actions. This includes creditor phone calls, emails, text messages, and other forms of debt collection harassment. It also halts any foreclosure actions that are in effect.

Chapter 13

By filing for Chapter 13 specifically, you may be able to set up an arrangement with your lender where you remain in your home while you pay them back over the course of 5 years. Keep in mind that you must have a consistent income for this option to be viable. While declaring bankruptcy may not necessarily prevent foreclosure, it can buy valuable time to consider other options.

Other options

If you are late on your mortgage and anticipate foreclosure, there are certain actions you can take. Given what is at stake, and the legal knowledge required, it is best to consult with an attorney before attempting these alternatives to foreclosure:

  • Mortgage modification: If your credit score is low or if you lack equity, a loan modification may be ideal for you. Our attorneys can assess your financial situation and lender agreement to determine if you qualify for modified mortgage payments.
  • Short sale: Another option is a short sale agreement in which you sell your home for less than the outstanding debt on the mortgage loan. If you owe your lender more than your home is worth, a short sale agreement may be your best option.
  • Deed in lieu of foreclosure: If you’re facing a long-term hardship, and are unable to modify or sell your home, you can see if your lender will agree to a deed in lieu of foreclosure. Under this legal mechanism, a borrower can willingly transfer the deed to their lender and be absolved of all mortgage obligations.

The word “foreclosure” causes anxiety for even the most stalwart homeowner. Yet if you’re behind on mortgage payments in the Bronx, you might not have to give up your home. A knowledgeable bankruptcy lawyer can review your case and help you devise an effective solution.

Thomas M. Denaro
About the Author: Thomas Denaro
Thomas M. Denaro is an experienced bankruptcy attorney serving the Bronx and surrounding areas. He represents Bronx families in bankruptcy court, and has handled thousands of Chapter 7 and Chapter 13 cases from beginning to end.