Preventing Foreclosure in New Jersey

Foreclosure Rates in NJ

According to Fortune magazine, New Jersey has the highest numbers of homes undergoing foreclosure.  Over seven percent of all homes in New Jersey with mortgages are currently in foreclosure.  On average, it takes approximately 480 days to complete a foreclosure in New Jersey.

Unfortunately, foreclosure rates are continuing to rise, especially in Ocean and Monmouth Counties.  There were over 58,000 foreclosure filings in New Jersey in 2010.  A significant number of the foreclosures that have occurred in Ocean County came as a result of the housing bubble that was expanding to unsustainable levels.  The following municipalities were affected by the housing crash: Toms River, Jackson, Brick, Lakewood, Point Pleasant and Stafford Township.  The impact of Superstorm Sandy in 2012 also caused devastation to the housing market along the Jersey Shore.

Chapter 13 Bankruptcy may Protect Your Home from Foreclosure

If you have fallen behind on your mortgage for an extended period of time, there is a good chance your mortgage company will institute a foreclosure proceeding.  A foreclosure proceeding involves a process wherein the bank repossesses your home and subsequently sells the house at an auction.  The money gained at the auction is used to pay the mortgage and any legal costs incurred.  A bankruptcy filing may postpone the finalization of the foreclosure process.  Filing a Chapter 13 bankruptcy may stop the foreclosure proceeding and allow you time to protect your home.  A Chapter 13 bankruptcy provides you with a mechanism to pay off the amount you are behind and stop the foreclosure in order to save your home.  In order to qualify for a Chapter 13 bankruptcy in NJ and save your home from foreclosure, you must have enough income to resume your mortgage payments subsequent to the approval of the Chapter 13 plan.  You must also be able to come current on your mortgage within the next five years.  In some cases, the Bankruptcy Court will also allow the debtor to “strip off” second mortgages, like home equity loans or lines of credit, in the event the home value falls below the first mortgage balance.

What to Do if Faced with an Impending Foreclosure in NJ

When you are behind in making your mortgage payments, the first step of the foreclosure process involves you being served by certified mail the foreclosure letter from your mortgage company.  Within a short time thereafter, you will be served with a mortgage foreclosure Complaint.  The homeowner has a 35 day time frame from the date you receive the Complaint to respond to the foreclosure action.  It is imperative that prompt action be taken at this time.

There are a number of options that you can undertake when served with a foreclosure Complaint.  One option would be to defend against the foreclosure action by filing a response to the Complaint.  Another course of action would be to file for foreclosure mediation.  You also have the ability to file for a loan modification or protection under the bankruptcy laws of the State of New Jersey.

Chapter 13 Bankruptcy and the Ability to Avoid Foreclosure

A Chapter 13 bankruptcy filing will have the effect of suspending the foreclosure process.  Pursuant to a Chapter 13 bankruptcy plan, the debtor/homeowner would need to propose a plan to the Bankruptcy Court that would avoid the loss of the residence to the foreclosure process.  A Chapter 13 plan will enable the homeowner to discharge a vast majority of personal debt, including credit card debt, medical bills and unsecured personal obligations, which would therefore enable the homeowner to use all of their remaining monies to be applied towards their obligations associated with the home, i.e. mortgage payments, etc.

A Chapter 13 filing will provide the homeowner with a time period of up to five years to satisfy any arrearages that have accrued as it relates to the obligation associated with the property, including but not limited to monthly mortgage payments, taxes, and insurance costs.   The protection afforded by a Chapter 13 filing could enable you to reinstate your mortgage and allow you to continue to reside in your home for as long as you wish.

Bankruptcy Filing Offers More Relief Than Mortgage Modification

Under a Chapter 13 Bankruptcy filing, the amount of your mortgage payment would remain the same, however, as indicated above, because your other debt is reduced or eliminated you will be able to make your payments more readily.  In a Chapter 13 proceeding, you make monthly payments to a United States bankruptcy trustee, which is typically hundreds, if not thousands, of dollars less than what you were paying for your credit card balances, medical bills and other debts.  Often the relief afforded by a Chapter 13 bankruptcy filing far exceeds what you would receive from a mortgage modification.

Get a Free Bankruptcy Consultation with a NJ Lawyer

Please contact the foreclosure prevention attorneys at Villani & DeLuca, P.C. today to find out whether or not you can prevent your New Jersey home from being lost in a foreclosure proceeding.  Villani & DeLuca lawyers offer a free initial consultation to all potential bankruptcy clients.  Call 732-965-3390 today to schedule your no obligation consultation!