Yes, you can keep your home if you file for bankruptcy in New York. But it’s not a given. And depending on your circumstances, there are a few different ways to do it.
If you file for Chapter 7 bankruptcy, then you can keep your home as long as the remaining equity in your home (i.e., the amount that you have not yet paid back) does not exceed the homestead exemption for New York, which is $170,825 for an individual and $341,650 for a couple. If the remaining equity exceeds the homestead exemption, then a trustee can sell your home to pay off creditors.
If you have too much equity in your home to file a Chapter 7 without putting your home at risk, the best option for keeping your home is to file for Chapter 13 bankruptcy. Chapter 13 bankruptcy means you work with your creditors, and with the supervision of the bankruptcy court, to create a repayment plan that usually takes 3 to 5 years. Under this plan, you can reduce the amounts you owe to unsecured creditors (though not to your mortgage lender, who is a secured creditor). With reduced payments to other lenders, ideally, you would have the amount you needed to make the payments on your mortgage and keep your home. In a Chapter 13 plan you can also gradually eliminate defaults on a secured debt like a mortgage by paying the back payments over the life of the plan.
Both Chapter 7 and Chapter 13 debtors in Brooklyn, Manhattan and White Plains bankruptcy courts can use the court’s loss mitigation program to force the mortgage lender to discuss modification.
If you’re worried about losing your home to bankruptcy in New York, you don’t have to make this decision on your own. The best first step is to meet with a good bankruptcy attorney who has experience and whom you trust to steer you in the right direction.
Please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner, at nybankruptcy.net/main, for a free initial consultation. I’ll answer all of your questions, and figure out the best strategy to help you move forward. The key, as always, is preparation and planning.
