Free Consultation
The office is open as per the NYS Covid-19 guidelines. We are now doing both in-person and telephone consultations. Please call the office at 718-855-6840 to schedule a time to speak with one of our experienced bankruptcy attorneys.

Will the automatic stay protect me from foreclosure in New York?

If you are facing foreclosure on your home in New York and you file for bankruptcy, will the automatic stay protect your home from foreclosure?

The answer:  Yes and no.

Once you file for bankruptcy, the automatic stay goes into effect and prohibits any creditors from taking any actions to collect money or assets from you.  This does indeed apply to a foreclosure as well.  However, if the mortgage lender or bank does have the right to foreclose on your home, there is the possibility that they can go to the bankruptcy court and get the automatic stay lifted.  (Note:  This is a typical scenario in a chapter 7 case.  However, it is not usually the case in chapter 13.)

And to be clear, the automatic stay is not temporary.  It lasts for the duration of the case, whether Chapter 7 or Chapter 13, other than instances where the judge signs an order vacating the stay.

Many people in foreclosure file a chapter 13.  The court will not lift the stay if the debtor makes post-petition payments and has a plan for paying back the arrears that the court confirms. Arrears can be paid back over 5 years without interest. At the end of the five years the loan is fully reinstated if the debtor completes the plan.

Also the Southern District of New York (SDNY) and some judges in the Eastern District of New York (EDNY) will put the loan into loss mitigation at the request of the debtor.  While the court cannot force a loan modification, it can force the lender to talk to the debtor.

All of the above said, there are various situations where a delay in and of itself may be to the homeowner’s advantage.  If you can buy an extra month or two, that’s additional cash on hand you’ll have.  Or, if you want to contest the mortgage, the automatic stay can buy you time to do so.

Contesting the mortgage has also become much more common.  Especially in light of the mortgage scandal affecting major home lenders.  Banks created tons of mortgages and then broke them up into tradeable pieces and then re-sold them to others who have re-sold them as well.  As a result, there are many instances where a bank has not been able to prove it is the rightful owner of the mortgage.  Or it takes time for the bank to track down and review the documentation.  So there may be strategic advantages to filing for bankruptcy to stop foreclosure.

Additionally, filing for bankruptcy will cancel unsecured debts that may mean more additional cash on hand for you that may enable you to make necessary payments on your mortgage.  Also, there are tax advantages to filing for bankruptcy since it cancels out your mortgage and other secured by your home, even though the lien on your home remains in place.

For more questions about foreclosure, bankruptcy, the automatic stay and effective strategies for dealing with foreclosure, please feel free to contact experienced Brooklyn NY foreclosure attorneys Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA
718-855-6840
http://nybankruptcy.net/

Recent Posts

Beware Grace Periods, Debtors

Too often, debtors see grace periods offered by lenders as free benefits. “Grace” makes it sound so innocent. However, debtors who routinely rely on grace periods when making payments will find themselves facing financial difficulties that might lead to bankruptcy. The reason is that although creditors offer grace periods to debtors, they also use them

Read More »

Bankruptcy May Not Rescue You From Vicious Personal Disputes

Bankruptcy is a technical process that assumes everyone working within it is mostly rational. To the extent that it expects parties to deviate from irrational behavior, the Bankruptcy Code and its accompanying rules include incentives to keep parties in line. Creditors are usually large and impersonal, and they rarely care if their debtors file bankruptcy.

Read More »

Non-Lawyers’ Explanations of Bankruptcy May Be Wrong

Do you have financial problems? Do you tend to ask your friends for advice? Is one of your friends an experienced New York bankruptcy lawyer who will explain the process for you? Are your friends otherwise knowledgeable people? The answer to these questions may be, “Yes but you don’t know it.” Although many bankruptcy lawyers

Read More »

6 Steps to Take Before Filing Bankruptcy

Leaving your case to an experienced New York bankruptcy lawyer is not the only step on the to-do list before filing bankruptcy. There are many things debtors should do (and not do) before they file, and the more organized and mindful debtors are, the easier the process will be and the more effective the result.

Read More »

Social Security Number Not Necessary for Bankruptcy

A question that’s commonly asked about New York bankruptcy is whether a debtor needs a Social Security number to file. Debtors ask because they sometimes run across the bankruptcy form title, “Your Statement About Your Social Security Numbers” (B 121), which asks debtors to list their current and prior Social Security numbers. The new bankruptcy

Read More »

How Can a Debtor (or Creditor) Get a New Trustee?

The trustee in a New York bankruptcy case is usually not the debtor’s ally. His or her purpose is mainly to administer the bankruptcy estate or ensure the debtor’s repayment plan goes according to plan. Trustees pursue preference payments, fraudulent conveyances, and other malfeasance committed by debtors. They frequently initiate adversary proceedings against debtors. In

Read More »
Scroll to Top