Is Bankruptcy A Viable Option In Order To Avoid Foreclosure?
I refer my clients to a bankruptcy attorney in two situations. One is where we’re facing an imminent sale of the property. Fortunately, I’ve been very successful at stopping sales without filing for bankruptcy. However, once in a while, I have not been able to and in that case, if you file a bankruptcy, it automatically stays the auction from going forward. In rare cases, some clients don’t have any real defense to the foreclosure action but they can go into the bankruptcy court and fight it there.
The other time I generally refer my clients to a bankruptcy attorney is if the client has significant credit card debt and they can’t afford to pay both their credit cards and their mortgage. It is a common mistake to pay your credit cards and not your mortgage because the credit card companies call more frequently. This is the worst thing you could do because your credit card debt is not secured by anything whereas your mortgage is secured by your house. If you have so much credit card debt that you’re falling behind on your mortgage, you might be a great candidate to try to strip away that credit card debt with bankruptcy, so that you can come back to me and we can try and get you a loan modification.
What Happens After I Actually Receive The Foreclosure Notice?
Part of what I do in defending homeowners is to review the closing documents to see if there were any predatory lending practices and to see what protections you have within your mortgage documents. Often, your mortgage gives you a protection that requires the bank to give an acceleration notice. I have had many foreclosure actions dismissed because the bank didn’t properly give that foreclosure acceleration notice.
There is also a law that requires a bank to notify the state banking department and give you a 90-day pre-foreclosure notice. The other thing that I would consider to be a foreclosure notice is the actual service of the lawsuit. Once that has been served, you are in foreclosure. You could consider an acceleration notice or a 90-day notice to be pre-foreclosure notices whereas the summons and complaints are the beginning of the actual foreclosure process. If you’ve received those two pre-foreclosure notices, you should be trying to fix the problem. Call your servicer or bank and try and get them to work out a deal with you.
If you get served with a summons and complaint, you have between 20 and 30 days in New York to file an answer. If you don’t answer within 20 or 30 days, depending on how you were served, then you’re in default and it’s very difficult to fight a default. You have a short period of time to respond and you really need help. That’s when you need an attorney. This is a very technical area. Once you find yourself in default, the bank then has an easy path to victory to win the foreclosure action because you didn’t file the paperwork you were supposed to file.
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