When you can’t pay your mortgage, the lender will put your home into foreclosure, usually for reasons beyond your control. In some New York City boroughs, such as Queens, Super Storm Sandy caused many of the foreclosures because people could not keep up with paying their mortgage, temporary housing and repairs.
According to Christie Peale, executive director of the Center for New York City Neighborhoods, Queens was already showing increased foreclosures before Super Storm Sandy hit. Other foreclosure reason include those who have gone through a divorce, had a devastating medical problem that wiped out their savings or lost their jobs.
Increased foreclosures statistics
According to Business Insider, New York saw a 200 percent increase in foreclosure starts in March 2013. The article also states that New York is a judicial foreclosure state, which means foreclosures go through the court, and that it takes about 1,049 days on average for a foreclosure to go through the system.
Unless your situation is short term because you increased your income, or in some cases went back to work, you have limited options. If you have a job that pays enough, you can often work with the bank to catch up on arrearages. Most banks will require that you pay the current mortgage payment in addition to payments on the arrearages.
You may also get your bank to agree to a short sale. A short sale means that you sell your home for less than what is owed and the bank agrees to take that payment as full payment. Other options, depending on how much equity you have in the home, could be a full sale or refinancing.
Sometimes, you can’t get back on your feet enough to try to save your home, you can’t rent it out because you are too far behind and the bank won’t agree to postpone foreclosure proceedings or the mortgage is much higher than the current market rate to rent your home. You may think you are out of options, but you do have one more.
You can file bankruptcy. There are two types of bankruptcy – Chapter 13 reorganization and Chapter 7 liquidation. Once you file, the bankruptcy court institutes an automatic stay. This means that creditors cannot continue collections and if foreclosure proceedings have been started, they must be put on hold until the court gives permission for the bank to continue with the proceedings. While filing bankruptcy is not the first option you should attempt, it is something that can give you the time to find a new home or to work something out with the bank.
Bankruptcy Court and filings
New York City bankruptcies are filed in the Southern District of New York Bankruptcy Court. According to U.S. Courts, 9,028 filings were started in the Southern District of New York. Of those, 7,547 were Chapter 7 filings, 1,462 were Chapter 13 filings, and 19 were non-business Chapter 11 filings.
Filing for bankruptcy
Filing for bankruptcy can be complicated especially since the bankruptcy abuse reform in 2005. Depending on certain factors, you may be able to file Chapter 7 or you may have to file Chapter 13. Once you decide that you have no other options to save your home, you should contact a bankruptcy attorney. An experienced bankruptcy attorney will help you gather the information required to file and will advise you as to how you should file.
Once the bankruptcy attorney uploads the filing to the bankruptcy court and receives a case number, the attorney notifies the mortgage holder’s attorney that you have filed for bankruptcy protection.
It does take some time to gather all the information and input it into the format required by the bankruptcy court, so this is not something that you should do at the very last minute. You should do it at a minimum of a week prior to the foreclosure sale. If you have a large estate, you need more time to gather the requested documents. While this is a decision that is not to be made lightly, it is something that you should decide at least three or four weeks prior to the foreclosure sale.
Filing bankruptcy as soon as possible in the foreclosure procedure gives your attorney more time to try to work out something with the bank. Even though you may have not gotten far with the bank, an experienced foreclosure/bankruptcy attorney may be able to get a bit further with negotiations. Even if you are not sure whether you want to file bankruptcy earlier in the process, you can speak to an attorney to learn more about the different types of bankruptcy filings and what documentation you will need should you wish to file in an attempt to get your home out of the foreclosure process.