Bank won’t modify my mortgage, how can I use the chapter 7 bankruptcy I just filed to avoid foreclosure?

The following are “some” of the things you can do to avoid foreclosure if you just filed a chapter 7 bankruptcy:

“Maybe” filing a “chapter 20” bankruptcy, which is a chapter 7 followed by a chapter 13, will help you.

• make sure the ch. 7 discharge is granted;

• some time after discharge is granted in the 7, but before the sale date of course, file a ch. 13 to force the lender to accept the current payment + the arrears spread over 36 or 60 months.

• Note: There likely won’t be a discharge at the end of the Chapter 13. This really shouldn’t matter because you just received a chapter 7 discharge.

• Note: You should consider “stripping off” any judgment and/or wholly unsecured liens.

• Note: If this is investment property you can try to cram it down in a ch.13.  However, the cramdown value has to be paid off by completion of the ch. 13 plan.

If none of the above will work, you could:

• After discharge, continue trying to obtain a loan modification from your lender (the foreclosure action will likely continue unopposed).

• Contest the foreclosure action in state court after the stay is lifted or terminates.
  

• Note: You may be able to defend the foreclosure even if a default judgment has been entered against you(see our earlier post “Fighting foreclosure after default judgment.”)

This is not legal advice!

The Law Firm of Vaughn & Weber, PLLC routinely represents homeowners facing foreclosure who have already filed or need to file for bankruptcy. We examine each homeowner’s specific situation to determine their best course of action.

We proudly assist residents of Long Island (Nassau county, Suffolk county) and New York City (Queens, Brooklyn, Bronx, Staten Island, Manhattan) with their bankruptcy and foreclosure matters.

Call (516) 858-2620 to arrange a FREE  consultation with a bankruptcy and foreclosure attorney!

Please visit our Foreclosure category to learn more about foreclosure issues.

Please visit our Bankruptcy category to learn more about filing for bankruptcy.