Just last week Governor Cuomo went to the national capital asking for $42 billion from the federal government: $32.8 billion to clean up the damage caused by tropical storm Sandy and the remaining $9 billion to help the state prepare for the next disaster. The Huffington Post itemizes the governor’s proposal, and if you do the math, you’ll find that 23.1 percent of it goes to “housing” alone.
This is an important point because back in 2005, a law professor at the University of Illinois, Robert Lawless, compared the number of bankruptcy filings from states where a hurricane or tropical storm made landfall to states that were not affected. He limited himself to storms that caused at least $1 billion in damage and occurred between 1980 and 2004. Despite the simplicity of his methodology, his findings were quite clear: In the 24-to-36-month period after a hurricane hit, bankruptcy filings were 50 percent higher than in unaffected states, even after accounting for the general upward trend in bankruptcies over the time period.
Lawless’ primary goal was to reduce the impact of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act would have on Hurricane Katrina victims because he believed the law’s real purpose was to reduce bankruptcies generally. For instance, why would hurricane victims need to meet the credit counseling requirement to show that their bankruptcies weren’t abusive? As a result, homeowners who are affected by Sandy will face a higher likelihood of filing bankruptcy and must clear a number of hurdles to do so nonetheless.
Here are some ways of avoiding that for yourself, keep your home, and afford any damages.
First, take a careful look at your homeowner’s insurance policy. (Hopefully it wasn’t damaged, and if it was, you’ll have to get a copy of it from your insurer.) It will list the situations where the insurance company will protect you from natural disasters and those where it will not. One particular issue that arises is what a “flood” means to you and what it means to the insurance company. Often, policies protect against flooding caused by rainwater but nothing else, like storm surge. According to Reuters, insurers are also throwing in “anti-concurrent causation clauses,” which deny claims when the damage is caused by multiple events including any one uninsured cause.
Next, file the claim as quickly as possible, paying attention to the deadlines included in the policy. It’s usually 60 days for federal flood insurance, which many mortgagees require for those who live near flood-prone coasts. When you do file the claim, simply describe the damage without attributing a cause.
Your homeowner’s insurance policy might not cover everything you wish it did, and you may suffer quite a bit of damage nonetheless. If your insurance doesn’t cover the damage to your home, you are still liable on the mortgage note. At that point, you may need to consider filing bankruptcy.
For answers to more questions about bankruptcy after a natural disaster, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy lawyer Bruce Weiner for a free initial consultation.
