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Can Chapter 13 Bankruptcy Stop Foreclosure? A Legal Guide by Kamini Fox, PLLC

Kamini Fox

chapter 13 bankruptcy

If you're facing foreclosure in New York, you may feel overwhelmed by financial stress. Fortunately, Chapter 13 bankruptcy can provide a path to saving your home. At Kamini Fox, PLLC, we specialize in helping homeowners navigate bankruptcy law to stop foreclosure and restructure their mortgage debt.


In this guide, we’ll explain how Chapter 13 bankruptcy works, its benefits, eligibility criteria, and how our firm can assist you in protecting your home.


Understanding Foreclosure and Its Consequences


What is Foreclosure?

Foreclosure is a legal process in which a lender takes ownership of a home after a borrower falls behind on mortgage payments. This can result in eviction and severe financial consequences.


Consequences of Foreclosure

  • Major damage to your credit score

  • Loss of homeownership

  • Difficulty obtaining future mortgages

  • Possible legal judgments for unpaid debt


How Chapter 13 Bankruptcy Can Stop Foreclosure


The Automatic Stay: Your Immediate Protection

Filing for Chapter 13 bankruptcy triggers an automatic stay, which immediately stops foreclosure proceedings. This means:

  • Your lender must halt the foreclosure sale.

  • Creditors must stop all collection efforts.

  • You get time to restructure your mortgage payments.


Chapter 7 vs. Chapter 13: Which is Right for You?

  • Chapter 7: Eliminates unsecured debt but does not stop foreclosure permanently.

  • Chapter 13: Allows you to catch up on missed mortgage payments while keeping your home.


How Chapter 13 Helps You Catch Up on Mortgage Payments


Repayment Plan Structure

With Chapter 13, homeowners can spread out mortgage arrears over 3 to 5 years while continuing regular mortgage payments.


Example: If you owe $12,000 in missed payments, you may pay $200 per month over 60 months, making it more manageable.


Other Debts Covered in Chapter 13

  • Car loans

  • Medical bills

  • Credit card debt

  • Tax obligations (in some cases)


Who Qualifies for Chapter 13 Bankruptcy?


To file for Chapter 13, you must:

  • Have a steady income to make payments.

  • Stay within secured debt limits ($1,257,850 as of 2023).

  • Have filed tax returns for the last four years.


What Happens to Your Home During and After Bankruptcy?


  • During Bankruptcy: You stay in your home while making payments.

  • After Bankruptcy: If all payments are completed, foreclosure is avoided.

  • Missed Payments: If you miss payments, foreclosure proceedings may resume.


Why Choose Kamini Fox, PLLC?


At Kamini Fox, PLLC, we have over 20 years of experience helping New Yorkers save their homes. We provide personalized legal strategies tailored to your unique financial situation.


Pros and Cons of Chapter 13 for Foreclosure Prevention


Pros

✔ Stops foreclosure immediately

✔ Helps you catch up on missed payments

✔ May eliminate secondary mortgages under certain conditions

Cons

❌ Requires strict budgeting

❌ Takes 3-5 years to complete

❌ Missing payments may restart foreclosure


Steps to File for Chapter 13 Bankruptcy in New York


  1. Schedule a Free Consultation with Kamini Fox, PLLC.

  2. Gather financial documents, including income statements and debt records.

  3. File your Chapter 13 petition with the court.

  4. Submit a repayment plan for mortgage arrears.

  5. Attend a confirmation hearing for plan approval.

  6. Make monthly payments according to the plan.


Other Foreclosure Prevention Options


If Chapter 13 isn’t right for you, consider these alternatives:

  • Loan Modification: Negotiate better mortgage terms.

  • Refinancing: Lower your interest rate.

  • Short Sale: Sell the home to avoid foreclosure.

  • Forbearance Agreement: Pause or reduce payments temporarily.


Avoid These Common Bankruptcy Mistakes


🚫 Waiting too long—filing too late may limit your options.

🚫 Underestimating payments—ensure the plan fits your budget.

🚫 Not following the plan—missing payments can lead to case dismissal.


Frequently Asked Questions


1. Will Chapter 13 bankruptcy stop foreclosure immediately?

Yes! The automatic stay halts foreclosure the moment you file.


2. Can I qualify for a mortgage after Chapter 13?

Yes, but it may take 1-4 years after completing the plan.


3. What if I miss a Chapter 13 repayment?

Missing payments could result in case dismissal and foreclosure restarting.


4. Can I include property taxes in my repayment plan?

Yes, overdue property taxes may be included.


5. How long does Chapter 13 stay on my credit report?

It remains for seven years, but its impact lessens over time.


Contact Kamini Fox, PLLC for a Free Consultation


If you're facing foreclosure in New York, Kamini Fox, PLLC can help. We understand bankruptcy law inside and out and will fight to protect your home. Contact us today for a free consultation at (516) 493-9920 or visit our website at kfoxlaw.com.

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