There are some Long Island homeowners who face significant financial challenges, above and beyond their problems making the monthly mortgage payment. The unexpected loss of a job or the sudden onset of a medical condition can leave many people relying on credit cards to make ends meet, and eventually the situation goes from mounting credit card debt to failed mortgage payments. Unlike credit card statements, there is no minimum payment for a mortgage — the monthly payment is typically a set amount.
Anyone who is familiar with previous posts here probably knows that filing for bankruptcy can be a prudent legal solution for someone dealing with significant amounts of credit card debt. But, can bankruptcy help a Long Island resident who is facing foreclosure as well?
The short answer is “Yes,” but there is a caveat – filing for bankruptcy may not completely stop the foreclosure process. However, what does happen in the immediate aftermath of a bankruptcy filing is that an automatic “stay” is put in place. This stay prevents creditors from continuing any ongoing collection efforts. If the bankruptcy filing takes place before a mortgage lender begins the foreclosure process, the foreclosure will typically have to wait until the bankruptcy proceedings conclude.
Of course, there are exceptions to every rule, and this is true of the automatic stay aspect of bankruptcy as well. The lender may ask the court to lift the stay, or some lenders may file for foreclosure before the borrower has a chance to file for bankruptcy. This is why it is important for Long Island residents who may be facing this dilemma to get the most accurate information about their own unique circumstances.