That is not necessarily the case. In fact, under New York Bankruptcy Law, a chapter 13 bankruptcy filing is often utilized as a strategy to prevent foreclosure. Last August the new bankruptcy laws amending New York Bankruptcy Law increased the homestead exemption to $50,000 per person ($100,000 for husband and wife/ joint filers). This means that anyone who owns real estate, including a co-op or condo, if it is the filer’s primary residence, can keep up to $50,000 of that home’s equity exclusive of the balance due the mortgage bank. Thus, if the filer maintains their mortgage and tax payments, in most instances under New York Bankruptcy Law, one can file for bankruptcy and keep the home.

(Courtesy of Association of the Bar of the City of New York)