Does Bankruptcy Stop a Foreclosure in New York?

Protection starts when the petition is filed. No hearing, no judge's signature. Section 362 of the Bankruptcy Code stops any act to enforce a lien against property of the bankruptcy estate, and a foreclosure auction is exactly that. If the sale is calendared for Thursday and the case is filed Wednesday, it ordinarily does not go forward — though, as explained below, a recent dismissed case can shorten the stay or prevent it from arising at all.

How long that protection lasts is the part usually left out.

• Chapter 7. The discharge normally issues 60 to 90 days after the date first set for the meeting of creditors, and the stay ends at the earliest of discharge, dismissal, or the closing of the case. Often that means a matter of months.
• Chapter 13. The stay can last the length of the repayment plan — but only while the case survives. Dismissal ends it, and the foreclosure resumes with arrears larger than on the day you filed.

Filing imposes a temporary injunction. What you do with that time shapes what happens next.

This is where much of what you read online is wrong. A discharge wipes out your personal liability on the note. It does not remove the mortgage lien. The lender can still foreclose afterward. The federal courts' own materials say it plainly: “filing of a petition under chapter 7 may result in the loss of property.”

Chapter 13 is the chapter with a cure mechanism. A plan can cure the default over a reasonable time while you keep making the regular monthly payment. Two limits matter:

• Chapter 13 cannot lower the ongoing payment on a mortgage secured only by your principal residence. Principal, rate and monthly payment stay as written; only the arrears are restructured. A narrow exception exists where the loan's last scheduled payment falls due before the plan ends.
• Plan length is five years if your income is at or above the applicable New York median family income. Below median, the plan runs three years unless the court approves a longer period for cause — and never more than five.

Do the arithmetic first. Thirty thousand dollars of arrears spread over sixty months is roughly $500 a month, on top of the resumed mortgage payment and the trustee commission and attorney fees paid through the plan. Payments begin within 30 days of filing, before a judge approves anything.

Completion is not the norm. Of Chapter 13 cases closed between fiscal years 2010 and 2016, about 38.8% of cases filed reached discharge. A separate study of trustee data from earlier cohorts put the figure at roughly 59% of cases that were confirmed. Those are different denominators, and any figure quoted without one is close to meaningless.

Filing does not end the conversation. A lender can move for relief from the stay, and that motion moves quickly: thirty days after the request, the stay terminates as to that lender unless the court orders it continued after notice and a hearing. The usual ground is cause, including lack of adequate protection — in practice, that the ongoing mortgage payment stopped after filing.

Repeat filings are the biggest trap. One prior case dismissed within the past year, and the stay in the new case terminates on the 30th day unless the court extends it. Two or more dismissed within the past year, and the stay does not go into effect at all unless you move for it and the court grants that motion. Where a filing was part of a scheme to delay, hinder or defraud creditors involving the property, an order can bar stay protection in any case filed for two years afterward.

In the Eastern District of New York, which includes Brooklyn, Queens, Nassau and Suffolk, one decision read that 30-day termination as reaching the collateral itself and the pending foreclosure proceeding, not just the debtor personally. Courts elsewhere have read it more narrowly. The point for a homeowner is that a second or third filing is not a reliable way to buy the same time again.

New York is a judicial foreclosure state. Every step needs a court order, which makes the process slow and gives a homeowner several places to be heard. It also produces one hard line bankruptcy cannot cross.

The right to cure a default on a principal-residence mortgage in Chapter 13 lasts until the residence is sold at a foreclosure sale. Not until the referee's deed is signed, delivered or recorded. Not until an eviction. The auction.

A New York bankruptcy court applied that rule in May 2026 to a homeowner whose property had been auctioned but whose referee's deed had not yet been executed or recorded. The Chapter 13 filing did nothing to reverse the loss of the equity of redemption. Because the sale had cut off the homeowner's legal and equitable interest, the house never became property of the estate, and the stay did not apply. The Second Circuit had previously held that delivery of the referee's deed is a ministerial act.

New York also has no statutory right to redeem after the sale. So work backward from the auction date. The options are wider the earlier you act.

Before a foreclosure can be commenced on a home loan here — broadly, an owner-occupied one-to-four family residence or condominium unit — the lender or servicer must mail a 90-day pre-foreclosure notice under RPAPL 1304, by registered or certified mail and also by first-class mail. Strict compliance is a condition precedent, and a defective notice can require dismissal. The summons and complaint must also carry the RPAPL 1303 homeowner notice, on its own page and on paper of a different color, plus an attorney's certificate of merit under CPLR 3012-b.

This next piece has no counterpart in most states. CPLR 3408 requires a settlement conference in a residential foreclosure on a home loan where you live in the property, held within sixty days after proof of service is filed with the county clerk. Both sides must appear with authority to settle and negotiate in good faith, and the lender must bring the payment history, the reinstatement and payoff figures, and any loss mitigation denial letters.

Two cautions. Attending the conference is not the same as answering the complaint; only a served and filed answer preserves your defenses. And if the answer deadline has passed, appearing at the conference lets you serve and file an answer within thirty days of that first appearance, with a reasonable excuse presumed and no substantive defenses treated as waived. Our foreclosure defense page explains what representation at those appearances involves.

Many homeowners who keep their homes do it through the loan, not through a court filing.

• Loan modification. HAMP ended in 2016, and there is no universal federal replacement. The Fannie Mae and Freddie Mac Flex Modification targets a 20% reduction in principal and interest. FHA replaced its temporary pandemic options with a permanent waterfall — partial claim, modification, a combination, and Payment Supplement — that servicers had to make available beginning February 2, 2026. FHA loans are not eligible for Flex Modification. More on loan modification.
• Repayment plan. Sometimes a modification would raise the payment. A structured payoff of the arrears fits better.
• A negotiated sale. Where the debt exceeds the value, a short sale can end the matter with the shortfall released — but only if the approval letter says so. A lien release is not a debt release. And the federal exclusion for forgiven mortgage debt on a principal residence expired for discharges completed, or discharge agreements entered into, after December 31, 2025, so forgiven balances are now generally taxable. Bankruptcy and insolvency remain separate exclusions. Speak to a tax professional first.

Federal servicing rules protect this work. A servicer generally cannot make the first foreclosure notice or filing until the loan is more than 120 days delinquent, and cannot move for judgment or hold a sale while a complete loss mitigation application submitted more than 37 days before the sale is still being evaluated.

This firm does not file bankruptcy petitions. That is a deliberate boundary, and it matters when you are deciding who to call.

If your income can support a plan and the arrears are too large for any servicer to restructure, Chapter 13 may be the right tool, and you should speak with a bankruptcy attorney about it. That conversation is worth having early rather than in the week of the sale.

What we do is the other side of the same problem: representing the homeowner at court proceedings, contesting the entry of a Judgment of Foreclosure and Sale, and negotiating with the lender directly — modifications, repayment plans, second-lien settlements, short sales — including after a judgment has been entered.

If you would like someone to look at where your case stands, the consultation is free. Call 516-719-4144 or get in touch. The office is in Jericho, and we represent homeowners in Nassau, Suffolk, Queens, Brooklyn, the Bronx and Manhattan. This page is general information, not legal advice about your situation.

Can I file bankruptcy the day before a foreclosure auction in Nassau or Suffolk County?

Filing before the auction ordinarily stops it, because the stay arises on filing without a court order. But it does not work for everyone: a recent dismissed case can shorten the stay to 30 days or prevent it from arising at all. You must also have completed a credit counseling briefing from an approved agency during the 180 days ending on the filing date. There is a narrow exigent-circumstances exception. A same-week filing is possible, but it leaves very little room for error.

Does Chapter 7 save my house from foreclosure?

Usually not. Chapter 7 has no mechanism to force a lender to accept past-due payments over time. The discharge erases your personal liability on the note, but the mortgage lien survives and the lender can still foreclose. The discharge typically issues 60 to 90 days after the date first set for the creditors' meeting, so the pause is generally measured in months rather than years.

I filed before and the case was dismissed. Will filing again stop the sale?

It may not. If one prior case was dismissed within the past year, the stay in the new case terminates on the 30th day unless the court extends it after finding the later case was filed in good faith. If two or more were dismissed within the past year, the stay does not go into effect at all unless you move for it and the court grants that motion. Dismissing your own case after a lender has moved for stay relief can also bar you from filing again for 180 days.

How long does a bankruptcy stay on my credit report?

By law, up to 10 years for any chapter, measured from the order for relief or the date of adjudication. The commonly repeated seven-year figure is voluntary policy at the three national credit bureaus for Chapter 13, and it runs from the filing date, not from discharge. That is bureau practice, not a legal right. The delinquent accounts themselves run their own separate seven-year clocks.

Does New York's homestead exemption protect my home from foreclosure?

No. The exemption in CPLR 5206 protects a portion of your equity above liens and encumbrances, and it operates against money judgments. A mortgage is a lien you granted voluntarily, and federal lien-avoidance law expressly does not apply to a judgment arising out of a mortgage foreclosure. The exemption can matter for surplus proceeds and for other creditors. It does not stop a foreclosure.