Losing your home to foreclosure can be devastating. Not only will your credit be damaged, but you will also be forced to leave the place you live and are raising your family.
While a lender in Suffolk County, New York can foreclose if you are unable to pay your mortgage, there are solutions for homeowners who are struggling. An experienced attorney can help you to explore the different options available that may help you to save your house from foreclosure.
Homeowners have several different options to try to save their house from being foreclosed on by the lender. The two primary choices include modifying a mortgage and filing for bankruptcy protection.
When you file bankruptcy under a Chapter 7 filing, you can discharge most of your debts. This means you won’t have to pay back credit cards, personal loans and other unsecured debts. Eliminating these bills may provide you with enough money to get and stay current on your mortgage payments.
Chapter 7 does not eliminate your mortgage, but it can delay a foreclosure action because an automatic stay goes into effect when you file. This prevents your creditors from pursuing collections activities like foreclosure. The bankruptcy process buys you time to negotiate with your lender to find a solution if you want to keep your house but may not be able to pay in full.
Chapter 13 doesn’t get rid of your debts like chapter 7 does, but instead requires you to enter into a 3-5 year repayment agreement. Again, you have to pay your mortgage in full but the bankruptcy can buy you time to negotiate with the lender.
In certain cases when you have a second mortgage or other non-primary mortgage, the chapter 13 can also allow you to reclassify the second mortgage debt as unsecured and thus pay back less than the full amount owed on the second loan. This is possible through a process called lien stripping that is available when you owe more than the home is worth. If a foreclosure would generate only enough money to pay back the primary mortgage, the second home loan isn’t actually secured debt after all. Lien stripping recognizes this.
Because bankruptcy does not eliminate your mortgage, you will need to negotiate with your lender to lower your monthly payments if they are unaffordable.
Mortgage modification programs exist that can reduce the amount you pay each month and, in some cases, that can even reduce the principle balance on your home loan. Unemployed individuals could also get up to 12 months of relief where their payments are suspended.
Mortgage modifications are available through the Making Home Affordable program that was established by the federal government. You will need to speak with your lender to determine which modifications you may be eligible for. It is common for homeowners to negotiate a modification as the bankruptcy moves forward, since lenders may be more willing to work with debtors who they know cannot pay back the loan.
The Law Offices of Robert D. Weiss, P.C. will help homeowners find ways to save their home. Call today to schedule a consultation and learn how we can represent you.