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Harris-Courage & Grady, PLLC April 26, 2015

The Short Answer Is Probably Not.

The First Questions We Need to Ask Are :

  1. Who owns the property? Just you or you and your spouse?

  2. Do you have a mortgage?

  3. If so, how much do you owe and…

  4. Are you are current your mortgage payments?

Some people think they can get a free home if they file bankruptcy. This is not the case.

If You Are Current with Mortgage Payments, Then We Need to Know how Much Your Home Is Worth.

We then calculate the amount of equity you have in the home.

For example, if your home is worth $125,000 and you owe $25,000, then your equity is $100,000.

If You Are Behind on Your Mortgage, You Have a Couple of Options.

The best option, and one we recommend, is to file a Chapter 13 bankruptcy.

In a Chapter 13 bankruptcy, you can pay back the mortgage arrears over 5 years without interest. We can force the mortgage company to accept this proposal.

Once you file the bankruptcy, you start making your regular mortgage payment. You also pay the Chapter 13 plan payment which includes the arrears on the mortgage. Filing a Chapter 13 as soon as you can is important. Sometimes clients get so far behind on the mortgage payments that the repayment of arrears over 5 years exceeds the original payment and then, most clients cannot afford it.

The second option is to try to negotiate with the mortgage company for a modification.

Some may think this is better than filing bankruptcy but they learn, after it is too late, that they were wrong.


Trying to negotiate with the mortgage company is extremely frustrating. Mortgage companies make proposals which really just postpone the problem. They make temporary modifications and then deny the final modification. The process is very complicated and, most of the time, just does not work.

The good news is that the Syracuse Bankruptcy Court now has a program to help increase of the odds of getting a mortgage modification.

You can file a Chapter 13 bankruptcy, force the mortgage company to accept the plan and, working with your Syracuse Bankruptcy Lawyer, you can also try to negotiate for a mortgage modification under the direction of the Syracuse Bankruptcy Judge.

If the mortgage company offers a better deal, you can accept it but you are protected by the Chapter 13 bankruptcy plan if the mortgage company refuses. This gives you the best of both options.

How does this work?

Under New York State exemption law, we can protect up to $75,000 of equity in a home per person. Therefore, if the home is owned by you and your spouse, we can protect is $150,000 in home equity.

If you had the $100,000 equity from our example above but the home was only in your name alone, we would have a problem of too much equity. In a Chapter 7 bankruptcy, the trustee would sell the house, pay you $75,000 and retain the rest to pay your creditors.

However, in a Chapter 13 bankruptcy, we can pay the creditors the unprotected equity over a 5 year period of time and thus protect your home.

This explanation is long but you don’t have to decipher it alone.

When you speak with Laura Courage, a Syracuse Bankruptcy Lawyer, she will analyze your unique situation and will let you know if there is an issue in protecting your home. Call today to schedule your appointment at 855-269-2889.