The word foreclosure is frightening. People are afraid of being homeless and worry about their children. They have asked the bank to accept payments and the bank has refused.
When you hear that your house is "in foreclosure," it actually means many different things over a two-year time line. Initially, it could simply mean that you are three months in arrears, the bank has refused to accept partial payments and it has transferred your physical file to the foreclosure department of the bank.
At a later stage, it could mean that your file has been sent to an outside law firm. First, they will write you a letter and after that they will serve you with a very large package of papers, including a summons and complaint.
After you have received the summons and complaint, the actual process before your house is sold typically takes approximately 1 1/2 years. You will then have three options: (i) defending the lawsuit; (ii) not defending the lawsuit but responding to a letter from the court to appear for a conference at court to attempt to modify your mortgage; or (iii) living in the house without making any payments and allowing the bank to ultimately take the house back, if you have no equity in the house and no reasonable ability to make payments.
A common issue is that people who have home equity loans find that their house is not worth as much as it used to be. We have helped many people deal with these issues. Bankruptcy also provides two additional options. First, if you owe less than one year of missing payments and can now afford to pay your regular mortgage amount plus a so-called "catch-up" payment, we can file a five-year, interest-free Chapter 13 repayment plan. Although the bank may refuse to accept your payments now, it has no choice if you file a Chapter 13 bankruptcy case. Second, if you would like to move on from this house without any liability for a deficiency judgment or any income tax liability (form 1099) for the bank's write-off, then a Chapter 7 bankruptcy could be a useful tool.
Finally, if you would like to keep the house and can prove your ability to make reasonable mortgage payments, then mortgage modification is another option.
What homeowners in financial trouble need to understand is that no one will be locking you out of your house without notice and putting you on the street. You typically have 1 1/2 years to develop a workable solution. Our attorneys will help you choose the best option and we have the skills and experience to implement your plan. Please call for a free consultation.
Contact Our New York City Lawyers for Help With Mortgage and Bankruptcy Issues
If you have been threatened with foreclosure, we can help explore your options. Contact us online or call 718-442-4424 to schedule an appointment to discuss your situation.