Can I Stop My Foreclosure by Filing for Chapter 13 Bankruptcy?

An experienced foreclosure attorney can help you pursue numerous options to try to stop a foreclosure action against your property, including loan modification, mediation, short sale, deed in lieu of foreclosure, among others. Many homeowners come into our office wondering: is filing for Chapter 13 bankruptcy a way to halt a foreclosure?

While you cannot prevent foreclosure by discharging your mortgage loan, Chapter 13 bankruptcy is a useful tool to delay foreclosure and help you regain control of your financial situation so that you may become current on your mortgage payments and retain ownership of your home. The following are some ways in which Chapter 13 bankruptcy¹ may help you if you are facing foreclosure.

Stopping the sale of your home

As soon as you file for bankruptcy, an automatic stay² goes into effect that immediately halts all collection efforts and legal actions against you by financial lenders. This includes mortgage lenders and, therefore, an impending foreclosure sale will not be allowed to proceed without special permission from the bankruptcy court. This automatic stay will remain in effect as long as you abide by your Chapter 13 repayment plan, which often lasts up to five years and can provide plenty of time to become current on your mortgage and ultimately prevent foreclosure.

Helping you catch up on payments

Having to continually pay your monthly mortgage while facing significant arrears can be overwhelming and often seems impossible. Fortunately, Chapter 13 lets you reorganize your existing debt payments at the time of your filing, including any mortgage arrears. You will make one monthly payment to a bankruptcy trustee,³ which will be allocated to your mortgage lender and other creditors. This does not mean you are in the clear, however, as you will still have to stay current on your monthly mortgage during your repayment plan. If you again become delinquent or default on your mortgage, your lender may obtain permission from the court to lift the automatic stay and allow a sale to take place.

While Chapter 13 is by no means a quick fix for everyone to avoid foreclosure, it has helped many homeowners catch up on payments to avoid losing their homes in foreclosure. However, Chapter 13 generally works better if you have a small to moderate amount of mortgage arrears and if you file for bankruptcy relatively early in the foreclosure process. If you have several years of high mortgage arrears, mortgage modification is often a superior solution to filing for Chapter 13. Modification can absorb a higher amount of arrears and help you become current on your mortgage even if you have fallen far behind.

If you have any questions regarding whether Chapter 13 or other foreclosure solutions may be right for you, call a Long Island and New York foreclosure attorney at the Law Office of Ronald D. Weiss, P.C. at 631-296-0912 for assistance today.

References:

¹http://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics

²https://www.law.cornell.edu/uscode/text/11/362

³http://www.justice.gov/ust/eo/private_trustee/locator/13.htm#NY

Have You Been Abused By Your Mortgage Lender?

When a mortgage lender or servicer engages in wrongful behavior, many homeowners believe they have no power to hold these large financial companies responsible for their actions. While legislators in Washington tend to favor big banks over struggling homeowners, these individuals can seek recourse in the court system. While filing an abuse complaint against a major corporation can seem daunting, an experienced foreclosure attorney can stand up for your rights and guide you through the legal process.

Recent abuse cases indicate hope in the courts

Two cases from earlier this year give homeowners some hope that courts can be on their side in mortgage abuse and fraud cases. Both cases involve wrongful actions by banking giant Wells Fargo—a lender with a marginally better reputation than other mortgage companies.

In New York, Wells Fargo was involved in a five-year-long foreclosure case over a $170,000 property. In order to successfully pursue a foreclosure, a bank is required to present certain proof of ownership of the mortgage loan, including notes, assignments, and indorsements. The bankruptcy judge for the Southern District of New York¹ found evidence that the bank had actually forged the documents when they did not have the necessary indorsement on file. As a result, the court granted² the homeowner's objection to the foreclosure claim.

In the second case, homeowners from Missouri who had fallen behind on their mortgage gathered the arrears and Wells Fargo agreed to stop the foreclosure once the loan was current. However, despite sending a certified check for about $10,000 per the company's instructions, Wells Fargo continued with the foreclosure sale the very next day. The homeowners further asserted that Wells Fargo foreclosed with no actual proof of a mortgage note. The court held³ the bank acted intentionally deceptively and awarded the homeowners clear title to their property, $96,000 from Wells Fargo, $200,000 for emotional distress, and $2.9 million in punitive damages.

Mortgage abuse is very broad and the above cases are not necessarily examples of what will happen in every homeowner's claim for abuse. Though the courts do not always find so in favor of the homeowners, it is worth discussing your situation with an experienced foreclosure attorney to find out your legal options.

Have you been the victim of abuse?

Mortgage abuse can come in many forms, including:

·       Misapplying payments to the wrong account

·       Blocking loan refinances with other lenders

·       Charging illegal fees

·       Unresponsiveness to lenders trying to find solutions

·       Agreeing to loan modifications yet still initiating foreclosure

·       Failing to provide proper notice of default or impending foreclosure

·       Failing to follow New York state law in pursuing foreclosure

·       Initiating foreclosure without proof of mortgage notes

·       Falsifying documents to enable foreclosures

If you believe you have been the victim of any type of wrongful behavior on the part of your mortgage lender, call 631-296-0912 to speak to a New York and Long Island foreclosure attorney at the Law Office of Ronald D. Weiss today.

References:

¹http://www.nysb.uscourts.gov/content/judge-robert-d-drain

²http://graphics8.nytimes.com/packages/pdf/business/FranklinOpinion.pdf

³http://graphics8.nytimes.com/packages/pdf/business/judgment.1-26-15.pdf