Our readers may be familiar with many of the advantages that New York residents will benefit from in the bankruptcy process. Many different types of debt can be addressed, and the financial challenges of unexpected life changes that impact finances can be resolved. However, for some people, there is one main goal when filing for bankruptcy: stop foreclosure.
Under bankruptcy law, an “automatic stay” goes into effect upon the initiation of a bankruptcy action. This stay prevents all collection efforts by creditors and lenders, and that includes mortgage lenders. So, not only will you stop receiving those annoying calls and letters from credit card companies trying to collect unpaid debt, but your mortgage company’s foreclosure action will be temporarily halted as well. The stay remains in effect as long as the bankruptcy action is pending.
Unfortunately, as with most areas of the law, there can be exceptions to the automatic stay. The mortgage lender, if it is so inclined, could ask the bankruptcy court to allow the foreclosure action to continue regardless of the bankruptcy action. The court might grant that motion. But, even if that does happen, the New York resident who is filing for bankruptcy will likely have bought some time and delayed the foreclosure process a bit.
Facing the choices involved in foreclosure actions and bankruptcy filings can be difficult for New York residents. But, they don’t have to go through this alone. They can get the right information they need to make the correct choices in their unique financial circumstances.
Source: FindLaw, “Facing Foreclosure? How Bankruptcy Can Help,” Accessed May 29, 2017