Dear Mr. Neustein,

After 10 years of marriage, I recently got divorced. Suddenly, our two income household has been cut by more than half. I used to work full-time, but now I am limited to my disability check. We were recently served with foreclosure papers and I have basically been living off my credit cards which are almost maxed out. Should I file for Chapter 7 Bankruptcy to save the house? Is it too late to save my home from foreclosure?

Thanks,
Nancy

Dear Nancy,

In many instances, filing for Bankruptcy usually should be the option of last resort when trying to save your home. The best option is to hire an experienced litigation attorney to defend the foreclosure case on the merits of the case. The Mortgage is a contract which affords the Borrower with many protective covenants. The burden is on the bank to prove that they satisfied all the conditions precedent to bringing the foreclosure action. An experienced foreclosure lawyer can effectively defend the case much the same way as any litigation matter. A natural byproduct of any litigation matter is Time. It can take the bank a very long time to secure a judgment of foreclosure – IF they get one at all. While it is true that filing for Bankruptcy will put a “Temporary Stay” on any foreclosure proceedings, including the cancellation of a pending foreclosure sale, this Stay (or Freeze) is only temporary. Since a Mortgage is a “Secured Debt” (unlike a credit card which is unsecured), the Bank has the right to ask the Bankruptcy judge to remove the stay from the foreclosure proceeding. This request is routinely granted by the Bankruptcy Court. Sometimes it may make sense to file for Bankruptcy sooner if it helps you qualify for a mortgage loan modification. An example of this is if your debt to income ratio is too high. Sometimes, the elimination of some of the debts will improve your ratios enough to qualify for a loan modification. In any event, you should certainly consult an experienced attorney who has significant experience is Three distinct areas: (1) Foreclosure (2) Litigation and (3) Bankruptcy. There is subtle, but very important distinction between Foreclosure attorneys and foreclosure attorneys experienced in Litigation since many attorneys claim to specialize in foreclosures, but do not take depositions, routinely take these cases to trial, and Appeal the decisions of the lower court when there is a mistake, etc. Feel free to contact us directly any time with any questions, a free consultation or if we can be of further assistance.

Sincerely,
Frederick A. Neustein, Esq.