A common misconception is that you may lose your house if you have to file for bankruptcy. But the reality is that quite the opposite occurs. Continue reading to learn how you may maintain your house and how an experienced Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq. can help you in doing so.
By definition, what is an Automatic Stay?
The New York bankruptcy court will impose an Automatic Stay as soon as you file your bankruptcy petition. More specifically, an Automatic Stay is an injunction set forth on your creditors that prohibits them from further participating in any collection activities. Such collection activities may include making harassing phone calls, sending incessant mail, threatening legal action, and more.
Notably, an Automatic Stay may take place regardless of whether you are filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.
By definition, what is Homestead Protection?
New York State recognizes laws referred to as Homestead Protection. Namely, these laws protect you, as a homeowner, from losing all of your house’s equity when you file your bankruptcy petition. This is made possible when you declare a portion of your property as “homestead” and therefore protect it from a forced foreclosure sale.
The amount of property that you may declare as exempt may be dependent on where your house is located in New York State. That is, this amount may range from anywhere between $75,000 to $150,000. In addition, this amount may be doubled if you are married, and may be as much as $300,000.
With that being said, the Homestead Protection laws apply to both a Chapter 7 bankruptcy filing and a Chapter 13 bankruptcy filing. Specifically in Chapter 13, you may make catch-up payments for your mortgage over three to five years or via a loan modification.
Is it possible to lose my house if I file for bankruptcy in New York State?
Of note, the New York bankruptcy court will include your mortgage lender in an Automatic Stay. Meaning, your mortgage lender will be restricted from sending you a foreclosure notice. And even if you file your bankruptcy petition an hour before your foreclosure sale, the court will deem these foreclosure proceedings as null and void. Additionally, the court will automatically have the Homestead Protection laws apply to your bankruptcy case so that you do not have to file a separate homestead declaration.
The only way in which your mortgage lender may proceed with filing a motion to the court is if they can successfully make an argument that you have not complied with the mortgage requirements set forth by the bankruptcy code. With that, it should go without saying that you must consult with a skilled Rockland County bankruptcy attorney immediately. Give us a call whenever you can.