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Filing for Loss Mitigation and Bankruptcy at the Same Time

Homeowners often file for a Chapter 13 bankruptcy to prevent the pending sale of their homes. It is often recommended in addition to filing a Chapter 13 bankruptcy that the homeowner also file a loss mitigation proceeding. The Eastern District Federal Court encompasses Nassau County, Suffolk County, Kings County, Queens County, and Staten Island. Part of the loss mitigation program, as it currently exists, requires the homeowner to provide full financial documentation to the attorney for the financial institution which holds their mortgage. The loss mitigation program is a flexible program specifically designed to keep homeowners in their homes. Many judges participate in this program and supervise negotiations between the homeowner’s attorney and the attorneys for the financial institution.

Alternatives to Foreclosures

In addition to allowing debtors to obtain mortgage modifications, the loss mitigation program can help negotiate other types of alternative arrangements regarding homes in foreclosure. The program can be used to negotiate short sales as well as forbearance agreements. A short sale is where the debtors is allowed to sell their home for less than what is owed to the financial institution. If the short sale is approved, even though the financial institution did not receive the amount they are owed on the mortgage, the amount they receive acts as satisfaction of the mortgage debt. A forbearance agreement is an agreement that allows the debtor to catch up on his or her mortgage over a period of time up to one year.

Both bankruptcy proceedings and loss mitigation proceedings are complicated. The best way to successfully navigate through these programs involves hiring an experienced bankruptcy attorney who deals with Chapter 13 bankruptcy filings.

About the Author

Elliot S. Schlissel, Esq. has provided legal representation in bankruptcy proceedings for over 45 years. His law firm, Schlissel DeCorpo LLP, works with homeowners in foreclosure cases and helps them obtain mortgage modifications. Elliot can be reached for a free consultation at 800-344-6431 or e-mailed at Elliot@sdnylaw.com.

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