Will I Lose My Home in Bankruptcy?

Will I Lose My Home in Bankruptcy?

If you live in New York and worry about losing your home in bankruptcy, please know that this is not always the outcome. By working with a Homer bankruptcy attorney, we can determine whether or not your home is at risk.

We’ll start with some questions such as:

  • Who is the owner of the property?
  • Is there one mortgage or more?
  • What is the outstanding balance?
  • Are the payments current?

Many people believe that their home will be paid off in bankruptcy and, as such, nothing will be owed by the owner.

In truth, the value of the home has to be determined if you are current on payments, which is done by calculating equity.

For instance, if the home is valued at $150,000, but you still owe $80,000, the equity is $70,000.

Filing for Chapter 13

Even if you are behind on payments, there are a couple of options to discuss with your Homer bankruptcy lawyer. Filing Chapter 13 is typically the best since mortgage arrears are paid back over a 5-year period without additional interest charges.

With Chapter 13, your attorney has the power to force the mortgage company into accepting payments.

If you need to take action, Chapter 13 bankruptcy should be filed quickly. Unfortunately, people often fall behind on payments to the point that even with a 5-year repayment plan they never catch up. Obviously, this is the last thing that you want to happen in your situation.

Loan Modification

Your Homer bankruptcy lawyer can advise you of the risks for loan modification. While some view this as the best option, it can turn disastrous quickly. The challenge is that most mortgage companies have little interest in negotiating. Therefore, proposals are made that in reality only postpone the inevitable. Mortgage companies make temporary modifications, but when it comes down to the final modification, they deny it.

Ultimately, this wastes precious time and effort.

The Syracuse Bankruptcy Court has a new program designed to improve odds of getting a legitimate loan modification. Your Homer bankruptcy attorney would file Chapter 13 bankruptcy and then force the mortgage company to accept it. Then, under the direction of a judge, a mortgage modification can be negotiated. If a better deal is offered by the mortgage company, it can always be accepted, but if not, protection is offered under Chapter 13.

There is also a New York State exemption law in which each person who owns a home is entitled to equity protection up to $75,000. Therefore, if your home is owned by two people, protection increases to $150,000. Obviously, if you are the sole owner and the amount of equity is more than the allowed protection, there is a problem.

However, as the sole owner and under Chapter 7, your home would be sold by the trustee, then the $75,000 could be used to pay off other debtors. Remember, with Chapter 13, creditors can be paid back over a 5-year period using the unprotected equity. As a result, you may not lose your home.

Trying to protect your home with bankruptcy can be complex. But you’re not alone. The team at Harris-Courage Grady Solutions can walk you through filing bankruptcy in Homer. Laura Harris is a highly qualified Homer bankruptcy lawyer with years of experience helping people just like you.

Your confidential, no-obligation phone consultation is always free. Call us today at 855-269-2889 to discuss your options.

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