Does Bankruptcy Stop Foreclosure in New Jersey?
The possibility of losing your home in foreclosure is enough to make any person extremely upset and stressed. However, if you believe that you cannot cure the default of your mortgage, you may have the ability to file for bankruptcy to save your home. While filing for bankruptcy may seem undesirable, it may be your only option in some circumstances. If you are considering filing for bankruptcy to prevent foreclosure on your home, contact an experienced Hamilton bankruptcy lawyer. At Young, Marr, Mallis & Associates, our bankruptcy lawyers understand the position you are in, and we are here for you. Our firm is here to explain whether bankruptcy can be used to stop foreclosure in New Jersey.
Types of Bankruptcy in New Jersey
Filing for bankruptcy can indeed save your home from foreclosure. However, before you file for bankruptcy, you should ensure that you are aware of the various forms of bankruptcy and how they could affect you. The form of bankruptcy you choose should coincide with your unique financial situation.
When a debtor files for any type of bankruptcy, they will receive an automatic stay. An automatic stay prevents the creditors of a debtor from contacting the debtor to collect money they owe. This is a great benefit as it will allow a debtor the limited reprieve needed to prepare their bankruptcy filing thoroughly. The automatic stay will last until the bankruptcy proceedings have concluded.
The following is a list of chapters of bankruptcy that you can use to delay foreclosure proceedings.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is typically filed when the debtor is not in a financial situation to keep up with any of their bills. In a Chapter 7 bankruptcy, the bankruptcy trustee takes property owned by the debtor in order to sell it and use the proceeds to pay off creditors.
As you might have guessed, a filing for Chapter 7 bankruptcy means that you must be willing to give up certain valuable items you may own like jewelry and other personal effects. However, the sacrifice of these items means that you can keep your home and possibly larger purchases like a vehicle.
Many people prefer to file Chapter 7 bankruptcy because the process typically only lasts about 90 days. Once the process is complete, the debtor will be able to discharge multiple forms of debt from medical bills to credit card payments. In some cases, the debtor may even be able to eliminate some of their student loans.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is usually filed by debtors that have a steady source of income, but that cannot afford to timely pay all of their bills. Unlike Chapter 7 bankruptcy, the debtor in a Chapter 13 filing does not discharge all of their debt. Instead, the debtor will be able to reorganize their debt into a form that will be easier to manage.
Chapter 13 bankruptcy allows the debtor to submit a repayment plan to the court and their creditors for approval. This repayment plan usually proposes a way for the debtor to repay their creditors by way of a five-year plan or a three-year plan in certain circumstances. If the court and creditors approve the plan, the debtor’s bills will be consolidated into a single monthly payment.
If a debtor used a Chapter 13 bankruptcy filing to save their home, they would still have to pay off the balance of the mortgage. However, the overall balance or the interest rate on the mortgage may be significantly decreased to make it easier for the debtor to avoid defaulting.
It is important to note that a debtor should avoid defaulting on their payment plan. If the debtor defaults, the repayment plan could be revoked, and the debtor will have to pay the original balance of their bills.
Emergency Bankruptcy Filing for Mortgage Foreclosures
An emergency bankruptcy filing should only be considered as a last resort. An emergency filing allows a debtor to file a bare-bones bankruptcy application in an attempt to stall the foreclosure process. After the filing has been made, the debtor will have 14 days to file the rest of the information needed to proceed. As a bankruptcy filing is highly intensive, the potential for mistakes in this situation is great.
Contact an Experienced New Jersey Bankruptcy Attorney to Handle Your Case
If you or a family member need legal assistance to file for bankruptcy, contact an experienced New Jersey bankruptcy attorney today. With decades of combined legal experience, the bankruptcy lawyers at Young, Marr, Mallis & Associates would be honored to help you fight for your home and all the memories that come with it. To schedule a free legal consultation to discuss your case, contact Young, Marr, Mallis & Associates, at (215) 607-2715, or contact us online.