Long Island and New York City Bankruptcy Lawyers

Families who find their home in foreclosure can turn to bankruptcy to stop the foreclosure from going forward. The foreclosure process usually starts when the homeowners are more than three months behind on their mortgage payments. The first step the homeowners should look into before filing bankruptcy is forbearance agreements and mortgage modifications. If the bank will not agree to a forbearance agreement and the homeowner is not approved for a mortgage modification, bankruptcy provides an excellent means of stopping the foreclosure process.

Automatic Stay

When a homeowner either files a chapter 7 or chapter 13 bankruptcy, he or she receives an “automatic stay” from the bankruptcy court. The automatic stay is a court order that stops all collection activity of every type and nature and stops the foreclosure action from moving forward. If your house is scheduled for sale, it prevents the foreclosure sale from going forward.

Chapter 13 Bankruptcy

If a homeowner files a chapter 13 bankruptcy, they enter into a repayment plan that allows them to catch up on their overdue mortgage payments while simultaneously paying their current mortgage (and other expenses) over a period of five years (60 months). One of the main requirements for filing a chapter 13 bankruptcy is that homeowners must have sufficient income to make their current mortgage payments, as well as make payments pursuant to the chapter 13 bankruptcy plan.