Facing Foreclosure? Find Out How Bankruptcy May Help

Facing ForeclosureIf you are facing foreclosure on your home, filing for Chapter 7 or Chapter 13 bankruptcy may help delay the process for up to several months.  Foreclosure is a legal process in which a lender attempts to recover the remaining balance on a mortgage by forcing the sale of the home.  Foreclosure normally begins after the homeowner has missed several mortgage payments—usually three to four months.  At that point, the lender sends the homeowner a written notice advising that a foreclosure lawsuit will be filed in 30 days.  During this time, you may want to try resolving your payments through methods such as loan forbearance or loan modification.

However, if you do not qualify for these measures, you may want to consider filing bankruptcy as a way to avoid or stall foreclosure.  First and foremost, filing for bankruptcy automatically results in a court order known as a “stay”.  The stay informs your creditors that you have filed for bankruptcy, and thus all collection attempts must immediately stop.  This gives you several months of relief from foreclosure actions while your bankruptcy case is pending.

Consider a Loss Mitigation Program if You’re Facing Foreclosure

As a New Jersey resident, you may be able to find a solution through the bankruptcy court loss mitigation program offered by the United States Bankruptcy Court for the District of New Jersey.  This program seeks to maintain the lines of communication between you and your lender, which will hopefully result in a mutually beneficial agreement to avoid foreclosure.  Lenders are typically eager to participate in such programs, since foreclosure typically results in them selling the home for a value considerably lower than the outstanding mortgage.  Through the program, you can explore a wide range of loss mitigation options, including refinance, short sale, or surrendering the property in lieu of the deed, thereby fully satisfying the loan.  In order to participate in the program, you must have filed as an individual debtor in a Chapter 7, 11, 12 or 13 bankruptcy.  You must also have received a foreclosure notice from your lender prior to filing for bankruptcy.  Finally, your mortgage must be either a first or “junior” mortgage, or be classified as pooled, securitized or assigned.  You and your lender will have 90 days to agree on a settlement, but an extension can be granted if both parties need more time to negotiate.

Considering Bankruptcy? Call for a Free Consultation!

If you are considering bankruptcy as a way to protect your home or any of your other assets, please speak with the experienced bankruptcy attorneys of Villani & DeLuca.  While bankruptcy can help you hold onto valuable properties and absolve you from most of your debts, it can also cause considerable damage to your finances.  Our lawyers will ensure that bankruptcy is your best option by advising you of all the possible consequences of filing for bankruptcy in New Jersey.  In addition, they will discuss all the available legal options for resolving your debts and foreclosure issues.  Please call (732) 965-3350 to schedule a free consultation with one of our knowledgeable bankruptcy lawyers!