Foreclosure. It can be scary for your family to go through; unfortunately, it happens frequently in New Jersey.
In 2019, New Jersey led the nation in real estate foreclosure rate. Trenton and Atlantic City were two of the country’s highest metro area foreclosure rates.
So, what can you do about it? The answer is to hire a New Jersey foreclosure defense attorney.
Believe it or not, bankruptcy can save your home from foreclosure. If you have unmanageable debt and need to stall foreclosure proceedings, you might need to file for bankruptcy.
How does bankruptcy affect foreclosure proceedings in New Jersey?
Knowing the options if you are facing foreclosure and want a reprieve is essential. Debt negotiation and completing pre-foreclosure counseling can help stave off foreclosure. When you file for bankruptcy, you will receive a discharge at the end. This discharge can allow you to obtain a mortgage in the future.
Read on to learn more about how bankruptcy postpones foreclosure proceedings.
Intent of Foreclosure
The first step of foreclosure that you need to be aware of is the intent of foreclosure. This letter from your mortgage company lets you know that your house will be foreclosed on in 30 days unless the mortgage terms are fulfilled.
It is important not to panic at this stage. In New Jersey, mortgage lenders must give you 30 days of notice before starting any legal proceedings. This means that you have time to take in what is happening, and more importantly, you have time to develop a plan of attack. This is where you should start getting as much money together as possible.
If you have no luck doing this, then this could be when you look for a foreclosure defense attorney to go over your options.
Foreclosure Complaint
A foreclosure complaint is when the mortgage lender will complain to your local court about you failing to pay what you owe on your mortgage. To recoup that money, the lender will ask the court to foreclose your house and sell it to get as much money back as they can.
From there, you will have 35 days to respond to that complaint. You can either contest the foreclosure from there or take an uncontested stance. Only once this step is complete will the sale process potentially start.
There needs to be a final judgment on this foreclosure complaint before your home is sold. A judge needs to grant permission for the lender to sell your house to recoup the money they are owed.
Once the ruling of a foreclosure complaint gets granted, the process of selling the home will begin.
Sheriff’s Sale
A crucial step in foreclosure if you want to save your home. You will lose ownership (most likely to the lender), and you will not be able to get it back. Once a sheriff’s sale happens, there is nothing that you can do to protect your home.
So, how does this work? You have options to delay this sale if the foreclosure process reaches this stage.
First, the sale date will not be earlier than four weeks before an eviction ruling. According to New Jersey law, the date of sale must be advertised before sale conduction. However, that is not the only delay; in New Jersey, homeowners have the right to ask the sheriff for two adjournment periods for the sale date.
You would have to pay $28 each time to do this. The good news is with that paid; you can get the sale date pushed back for two weeks for each adjournment period.
The sheriff’s sale may not happen for at least two months after a foreclosure ruling. You then have two extra months to try to prevent a sheriff’s sale from happening and to prevent the loss of your home.
Remember, you are about four months into the process at this point since the notice of foreclosure. During the last two months, though, you need to devise a plan to save your home.
This is where bankruptcy can come in.
Filing Bankruptcy
Given the article’s title, you are probably questioning how bankruptcy can save your home. The answer is that filing bankruptcy causes a pause on all foreclosure proceedings.
That means the local government has to stop what they are doing and delay your home sale if it has reached that stage. This can be big in potentially saving your home because it forces the sheriff not to sell your home until your bankruptcy arrangements have been made.
There are two ways that you can do this.
Chapter 13 Bankruptcy
So, what is the best way to save your home via bankruptcy? The answer is to file a Chapter 13 Bankruptcy.
This type of bankruptcy is favorable to homeowners with debt they still owe. What this does is allow the homeowner to come up with a payment plan to repay the debt that they still owe to the mortgage lender.
You can file a repayment plan that lasts between three and five years. If you make less than New Jersey’s median state income, it will likely be for three years. If you make more than that median income, it will likely be for five years.
In exchange for taking this plan, you will get permission to keep ownership of your home with the promise of paying off part or all of your remaining debt within the proposed time period.
Know that this is an option that can potentially save your home. Also, be aware that you may have to sacrifice other possessions or assets to go this route.
Sit down with your lawyer and figure out how plausible this option is for you.
Regular Bankruptcy
The other option that you have is to file a typical bankruptcy. However, this one would not be as easy to keep your home as Chapter 13.
It gives you 60 days to potentially get some money together to repay your debt. This may be a good option for somebody confident that they can get that money together quickly.
The catch with this type of bankruptcy is that to redeem your property, you still have to pay the entire amount owed. So, while it can delay foreclosure and a completed sale, this type of bankruptcy is best for people that can get the money they owe together quicker.
Other Options
Besides bankruptcy, you only have two other options if you are trying to save your home from foreclosure.
The first option is to pay off the debt that you owe simply. However, if you are filing for bankruptcy or allowing your home to get this far into foreclosure, this is most likely not an option for you.
The second option would be repurchasing the house at the sheriff’s sale. A new bill in New Jersey allows homeowners foreclosed on to make a significantly smaller payment on a purchased home in a sheriff’s sale than in years past.
You used to have to be able to put 20% of the money down on the home. Now, you only need to be able to put 3.5% of the house down.
The downside is that this option can cost you more money in the long run, and you are just getting into a new mortgage.
Say your home sells for $300,000 in an auction. That would mean you have to have $10,500 ready to go as a down payment on that house. You may not have the money to make that down payment upfront.
Hire a New Jersey Foreclosure Defense Attorney
This is how bankruptcy can potentially save your house from foreclosure. Not only can you get the sale of your home delayed because of it, but you can also buy time to propose a repayment plan if you decide to file Chapter 13 Bankruptcy.
You need to have a New Jersey foreclosure defense attorney to do this right. Get a consultation with us today.