On October 29, 2012, tropical storm Sandy made landfall in the Mid-Atlantic states, causing storm surges in New York City and wreaking devastation in New Jersey and elsewhere. Many New Yorkers’ homes were destroyed, but as one might expect their mortgages were not. It’s been documented that natural disasters lead people to file bankruptcy, so before the next “superstorm” strikes the region again, here’s a list of tips for how to handle the mortgage after the disaster.
- The most important step is to buy homeowner’s insurance, which is already mandatory, but some people nevertheless avoid doing it. However, it’s not just important to buy homeowner’s insurance but to buy good homeowner’s insurance. Scrutinize the plan. Make sure that it covers the exact types of disasters that can affect New York in the era of freakish events, which now includes hurricanes. A “storm surge” might not be considered a “flood” according to your policy.
- Similarly, be careful of policy clauses that deny coverage if your home is damaged by many causes while only one or more is not covered. Your insurer will legally deny coverage based on the uncovered cause alone.
- It’s usually a good idea to take out a little more cash than you might actually need before the disaster occurs, if you can.
- Once a disaster hits, do not miss any mortgage payments. You are still legally obligated to pay the debt even if your house is literally underwater. Direct withdrawal systems help in this regard, and hopefully there’re sufficient funds in the account to make the payment. Don’t worry about the bank being destroyed: They have redundant systems hundreds of miles away that track what’s in your account.
- When the dust settles, try to salvage your important documents, e.g. your deed, insurance policy, prior tax returns, etc. Carefully document the damage done to your home without attributing it to any specific cause—that’s the insurance company’s problem—and then file a claim. The sooner you can file the better.
- Inform your mortgage company what happened; take detailed notes about what it says.
With any luck, you will be able to make the mortgage payments, but even if you can you still might lose significant income from not working. You might not even have a place to work. If this is the case, then you should call an experienced New York bankruptcy lawyer to explore your options.
For answers to more questions about natural disasters, bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced bankruptcy attorney Brooklyn NY Bruce Weiner for a free initial consultation.
