Difficult Choices for Homeowners Following Hurricane Sandy
In many ways, the storm was the simple part. When Hurricane Sandy blew into the greater New York area in October 2012, it took barely a day to wreak $65 billion worth of damage.
But the financial challenges of Sandy linger more than a year after its brief moment. Many businesses were destroyed and never rebuilt — leaving thousands without jobs. The very threat of water has changed how New Yorkers now regard the sea. For homeowners, special financial challenges come in various forms, leaving many questions as yet unanswered:
- If a home is salvageable but in newly defined storm floodplains, the home should be elevated — costing about $75,000.
- A homeowner who chooses not to elevate the home (according to FEMA calculations) may face a quadrupling of property insurance. Anecdotal reports include a homeowner whose rates would rise from $7,000 per year to $31,000 if the home remains at the pre-storm level.
- If the pre-storm value of the home was tens of thousands of dollars less than when it was purchased during the real estate bubble, continuing to pay that elevated mortgage cost to the bank while the home is uninhabitable and needing hundreds of thousands of dollars in repairs may be financially irrational.
On top of all this, other assets (autos, furniture and appliances) may have been lost in the storm. For many, filing for bankruptcy at least allows for a clean start. Chapter 7 allows a complete liquidation of assets, so the filer can rebuild a financial life under different circumstances. In situations where the debt might be managed over time if given protection from predatory creditors, a Chapter 13 filing might make more sense. Speak with a New York bankruptcy attorney to learn about the different options.