Thursday, March 5, 2015

Unaffordable Mortgage following Expiration of Reduced Payments from Chapter 13 Bankruptcy

Question: My home is underwater by about $100,000. I filed Chapter 13 Bankruptcy six years ago and my bank gave me a reduced rate for those six years. Now that the six years are over, my monthly mortgage payment doubled, which is impossible for me to afford. Will a bank typically foreclose on a property that’s underwater as much as mine? What options are available to me? I would like to stay in my home, I just can’t afford my new monthly mortgage payments.

Response: Yes, the bank will absolutely try to foreclose on your property even if there is no equity. If you do nothing (i.e, if you are not paying the mortgage), it is the bank’s right to bring a foreclosure suit against you. You can apply for a loan modification, which may reduce your payments again. That might be your only option if you want to stay in your home. Oftentimes, while the bank is considering you for a loan modification, they may not be initiating the foreclosure process to determine if the case can be resolved without it. However, this is not a guarantee and many banks may begin foreclosure even if you are in review. If loan modification is not an option, you would have to consider doing a short sale or a deed in lieu of foreclosure. It is better to explore a short sale or a deed in lieu of foreclosure than to allow the bank to foreclose, as the bank may then initiate a deficiency judgment to go after you for the difference in the amount owed and received at the foreclosure sale.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2016 Law Office of Svetlana Kaplun, P.C.

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