Foreclosure and Bankruptcy South Jersey

Among the top concerns for South Jersey homeowners who are struggling to keep up with their bills is whether they will be able to hold onto their home, particularly once they are threatened by the bank with foreclosure. Foreclosure is the process of taking possession of a mortgaged property when the person named on the loan does not keep up with their payments. Foreclosure actions do not come from out of the blue – the homeowner will generally know that they have not kept up with the payments that they owe and will have receive several notifications of the impending action. The question that we frequently hear is whether it is better to file for bankruptcy, or whether there is a better answer.

There are several strategies when it comes to foreclosure. The first is mortgage modification/loss mitigation. This is when you apply to your mortgage company for the ability to get your arrears lumped together at the end of your mortgage, and have your payment lowered. If approved, this process takes a while and can be very frustrating, as the mortgage companies frequently lose applicants’ paperwork and end up denying them. Talk about headaches. Though there are some instances where we have found ourselves able to help clients with this by making sure that the income and paperwork are just right, even when these deals are approved they do not provide a monthly payment that is appreciably lower. What it does accomplish is getting homeowners back to “current” status on their mortgage.

Another option is to try to get a “short sale” or “deed in lieu of foreclosure”. In these actions, the borrower provides the property back to the lender as satisfaction of the loan in order to avoid foreclosure. Though this is hard, in some cases it is the right decision is to let the house go if you can get cash for the keys or work a short sale. The value of these options depend on your income and the house’s value, but this is a strategy we sometimes consider. There is a downside to keep in mind – there may be taxes owed when significant debt is forgiven.

Some clients choose to fight the foreclosure complaint. This may buy a bit more time, but normally is not successful.

Finally, there is the option of filing for bankruptcy in New Jersey. This is the most powerful option, as it stops the foreclosure in its tracks. We are sometimes able to combine the above strategies with the bankruptcy to save the home by repayment, or even clear the arrears with a mortgage modification within the bankruptcy. Different strategies can be used to sometimes clear a second mortgage completely in Chapter 13 if there is no home equity above the first mortgage. One thing that is certain is that if you are considering this option and it is at all possible, it is important to file for Chapter 7 bankruptcy before foreclosure than after.

If you have found yourself in a situation where you are facing the possibility of foreclosure, it is important that you act quickly in order to ensure that you have the opportunity to carefully consider all options available. The law office of Reinherz Law is here to help. Click here to contact us or call 856-302-3989.

 

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