Filing Bankruptcy During Foreclosure
Are you wondering if filing bankruptcy during foreclosure can save your home? Watch this video by our Jamestown bankruptcy lawyer Scott Humble to find out.
I had an interesting client come in the other day, and they were looking at mortgage foreclosure. We filed a Chapter 13 for them to save their house, and what happened is that the whole situation of saving the house, making the payments on the house to stay current and the Chapter 13 payment, was just too much. They were on social security. We discussed this early on, that it was not affordable, but they still wanted to try, so we filed a Chapter 13. It saved the house from foreclosure, but eventually things caught up to them.
Over a period of many months, they weren’t able to make the payments on the house. They weren’t able to make full payments on the Chapter 13, so a couple of things happened. After you don’t make full payments on a Chapter 13, the Chapter 13 trustee brings a motion to bring in front of the judge, asking for your case to be dismissed. Something that happens a little bit more quickly, though, is that the bank who has the mortgage on your house, pay strong attention to your current payments, that you’re staying current after the Chapter 13. For example, if we go and we file on June 15th, your first payment directly to the bank is going to be on July 1st.
Under New York state law, you’ve got a 15-day grace period, so it could be July 15th, but if they receive it after that, you’re paying late fees. What the bank does is they contact their attorneys that handle this. The attorneys bring what’s called a 362 stay-lift motion. That is the protection you get as soon as we file your bankruptcy with the court that stops that foreclosure, but what they’re saying is, you’re abusing the system of filing Chapter 13 so we can’t foreclose, because you’re not paying us. It goes in front of a judge, and in Chapter 7s, there really is not an excuse that the judge is going to buy.
In Chapter 13, we’ve got more wiggle room, and what we do is we try to go and make an agreement that everybody can live by. Sometimes that works, and sometimes it doesn’t work, but we certainly do everything we can for you to save your house.