You may wonder if you can keep your house when you file for bankruptcy in New York, even if you have received a foreclosure notice. This is a question that many New York residents have and worry about, since there are many misconceptions about what happens when you file for bankruptcy.
At Grady BK, PLLC, we are committed to providing our clients with the straightforward guidance they need as they navigate the process of filing for bankruptcy. We understand how complicated this process can feel, which is why our goal is to equip our clients with the knowledge they need to move forward with confidence. In this article, we will discuss whether or not you can keep your house during a bankruptcy and what to expect when filing for bankruptcy as a homeowner.
What Is the New York Homestead Exemption?
The first thing you need to understand as a homeowner if you want to keep your house during bankruptcy is the New York homestead exemption. Many individuals filing for bankruptcy have both federal and state specific exemptions that can help them protect certain types of property and assets. And the good news is that the homestead exemption is specifically designed to protect your home.
The homestead exemption works by protecting between $102,400 of equity in your home, if you have lived in NYS for 2 full years. Also, if you are filing for bankruptcy jointly with a spouse, you can double this amount if both spouses are on the deed.
How Does Chapter 7 Affect Your Home?
Most people assume that they can’t keep their home when they file for Chapter 7 bankruptcy. However, this isn’t the case since you can use the homestead exemption to protect your home’s equity.
So, if the equity of your home falls within the amount the homestead exemption covers, your home will be protected during the bankruptcy process. You would just need to continue making your mortgage payments moving forward.
Keep in mind that if you are behind on your mortgage payments, you will need to catch up on these payments. This is because Chapter 7 doesn’t provide any way of catching up on debt, so if the debt isn’t dischargeable, it’s still your responsibility.
It’s also worth mentioning that no matter whether you file for Chapter 7 or Chapter 13 bankruptcy, you also get the protection of an automatic stay. The automatic stay prevents all collection efforts from creditors, including any repossession efforts or foreclosure proceedings.
How Does Chapter 13 Affect Your Home?
Chapter 13 bankruptcy provides a better option for those with a higher or more stable income. Especially if you have fallen behind on your mortgage payments or your equity exceeds the homestead exemption, this is often your best bankruptcy option.
When you file for Chapter 13, you will begin a repayment plan that lasts 3 to 5 years and allows you to catch up on your debt, including past due mortgage payments. You keep all your property in a Chapter 13, even if you are equity that is behind the homestead exemption.
Common Mistakes Homeowners Should Avoid
If you’re ready to proceed with filing for bankruptcy, you need to be aware of some common mistakes you should avoid making. Bankruptcy can be a delicate process, and you don’t want to do anything that could potentially jeopardize it.
So, here are some common mistakes homeowners should avoid making so that their bankruptcy case moves forward smoothly:
Waiting too long: If you received foreclosure notices, you should act as quickly as you can and file for bankruptcy. If you wait too long and the auction happens and the sale of your home is confirmed by the court, you’ve already lost your home, and it’s too late.
Not disclosing assets: The number one rule when you file for any type of bankruptcy is complete transparency. The last thing you want to do is fail to disclose assets, as this can swiftly result in your bankruptcy case being dismissed. Also, not filing honestly can negatively impact your ability to file for bankruptcy again in the future.
Filing for the wrong type of bankruptcy: A lot of people qualify for both Chapter 7 or Chapter 13 bankruptcy. That is why you need to carefully determine which type of bankruptcy you qualify for so that you don’t waste valuable time filing for the wrong type of bankruptcy.
FAQ Section
Will filing bankruptcy cause me to lose my house?
No. You can use the homestead exemption to protect your home, or you may qualify for Chapter 13, which also allows you to keep your home.
How much home equity can I protect in New York?
This varies according to the county of New York you live in, but in Central New York and the North Country, you can protect $102,400 of equity in your house for each person on the deed.
What if I’m behind on my mortgage payments?
You will have to catch up on these late mortgage payments if you wish to file for Chapter 7. But if you qualify for Chapter 13, late mortgage payments can be added to your repayment plan.
Should I wait until foreclosure starts before filing bankruptcy?
No. You should file for bankruptcy before foreclosure; otherwise, you risk losing your home for good.
New York’s Top Compassionate Bankruptcy Attorney
If you need to file for bankruptcy, you probably still want to save your house, which is possible with the right strategy. At Grady BK, PLLC, we can help you with the entire bankruptcy process, including understanding the bankruptcy exemptions you may qualify for. Having the representation of a bankruptcy lawyer can give you peace of mind throughout this process, especially as you are making difficult decisions.
At Grady BK, PLLC, we can assist you no matter where you are in the bankruptcy process, ensuring you don’t run into any issues along the way. We are also here to help if you have any questions or concerns regarding your bankruptcy case.
Contact us today at 315-299-9005 to discuss your financial situation with a bankruptcy attorney in New York. Our team at Grady BK, PLLC, can help you navigate both Chapter 7 and Chapter 13.
