How a creditor may pursue payment for a debt in New York State can vary depending on such factors as whether a debtor’s property is in foreclosure. During the foreclosure process in New York, a property owner has certain rights that may affect those of creditors seeking payment. Creditors may need to develop unique strategies to pursue debt repayment accordingly.
What Does Foreclosure Involve in New York?
Typically, a lender must file a lawsuit to initiate the foreclosure process in New York. Although the specifics of the foreclosure process can vary somewhat depending on the exact details of your circumstances, they usually involve the following:
- Acceleration letter: A lender usually needs to send an Acceleration Letter to a borrower before they can officially file a lawsuit to foreclose on their property in New York State. Technically, a lender may send an Acceleration Letter as soon as a borrower is in default, meaning as soon as a borrower misses a single mortgage payment. However, a lender is more likely to send this letter after two or three missed payments. The letter essentially tells a borrower they have a certain amount of time to make up for missed payments, or they will have to pay the entire amount of the mortgage at once.
- 90-day notice: If a lender intends to file a foreclosure complaint, they must give a borrower 90-days advance notice before doing so. The borrower may be able to remedy the situation within this time period.
A lender can proceed to foreclosure if the borrower is unable to pay what they owe. How the process continues from there may vary depending on how (or whether) a borrower chooses to respond to the complaint.
Essential Information About Creditors’ Rights During New York Foreclosure Cases
Until the foreclosure process ends, a property owner in New York still has the right to use their property as if they’re still the owner (which they technically are). Thus, a creditor typically can’t seize their property. However, in some instances, a creditor may be able to seize property for payment of a debt outside of the foreclosure process.
Property owners in New York have a right to be free from harassment during foreclosure. Creditors’ rights to pursue repayment of debts can be somewhat limited as a result of this.
The fact that a debtor is facing foreclosure doesn’t necessarily mean a creditor can’t file a separate lawsuit. A creditor may still file a lawsuit for repayment of a debt. If the court sides in their favor, they might be able to leverage such means as wage garnishment to ensure payment.
The Value of Legal Assistance for Creditors in New York Foreclosure Cases
Creditors in New York State often benefit from coordinating with legal professionals in these circumstances. Because every case is different, it’s helpful to develop and implement collection strategies with the assistance of experts who understand how to operate within the bounds of the law.
Roach Lin, P.C., is a New York based creditors’ rights law firm.