Will a Long Island foreclosure lawyer be able to save your home from closure by filing a bankruptcy? He actually can but it depends on various factors and considerations. To be precise, it can postpone, delay, or stop a foreclosure depending on what type of bankruptcy you opt to file. There are two types of bankruptcies – chapter 13 and chapter 7. It is best to discuss each to understand them better.
When filing for a chapter 13 bankruptcy, you will have to comply to a repayment plan, designed to settle your delinquencies, that you have agreed upon with the lender as witnessed by the court. This modification usually has a set timeframe that you have to meet in order to maintain good standing. For the time being, your home will be protected as long as you continue paying your dues as stated on the repayment plan. Once you have completed your overdue loan, you can make your loan current and that will in effect save your home from foreclosure. However, you must understand that if you fail to settle your obligations during the repayment period, your home will again be subjected to foreclosure.
For a chapter 7 bankruptcy, all your debts will be discharged to give you freedom and a new start. However, take note that all your nonexempt assets will be sold and the proceeds will be used to pay off your debts by distributing them to your creditors – and that can include your home. Fortunately, in Long Island, a homeowner can exempt $75000 to $150000 of their home’s value. This means that if your home’s equity is lesser than the said range, then you will not be forced to sell it since the proceeds of that sale can still not be used to repay your creditors. In other words, you can save your home from foreclosure. As for your other assets, a bankruptcy trustee will determine which will be sold, so be ready to let go of a number of your properties.
Some homeowners turn to filing for bankruptcy not just to avoid losing their homes, but mainly to buy them some time. You see, once your Long Island foreclosure lawyer files it, the foreclosure proceeding is automatically stopped, so is the debt collection. That will give the homeowner a peace of mind while he struggles to find ways to pay off his debts and until the automatic stay expires. However, this does not mean that a bankruptcy is your instant solution to an impending foreclosure.
First of all, filing for bankruptcy is laborious and could be time-consuming, so be sure to hire a good Long Island foreclosure lawyer who can help you through it. Expect signing dozens or maybe a hundred forms because all your outstanding debts will have to be assessed to see if you qualify for a bankruptcy. Since proving that you are eligible for a bankruptcy can take a lot of time, you must act on it immediately or the foreclosure proceeding can outrun you and take your home before you can even submit your petition for bankruptcy. Another thing that you need to understand is that a bankruptcy will have a huge negative effect on your credit score. In other words, you will have to start all over again from square one to build your record in order to acquire future loans with low interest rates. This is devastating especially if you have such a good record before.
Nonetheless, be thankful that a Long Island foreclosure lawyer can help sort all of these out for you. He can give you sound advice to protect your assets and your record. Therefore, before you jump and decide to file a bankruptcy, discuss things out with your lawyer and consider your other options.