What to Do When Negotiations Fail and a Foreclosure Begins
Should negotiations prove fruitless and a foreclosure appears imminent, you will need to act quickly and decisively if you intend to save your home. Once at least 30 days have passed since the receipt of the Notice of Intention to Foreclose, your lending institution has the ability to file an official foreclosure complaint. You will then be served with a summons associated with the complaint.
If you have not already done so, now is the time to speak to an experienced lawyer, even if you not going to try and save the property. Our Howell foreclosure defense attorney can guide you through the steps of combating foreclosure or work to minimize your exposure if you intend to cede control of the real estate. This can include considering bankruptcy, the benefits of which we will discuss more below.
You will have 35 days to respond to a foreclosure complaint. You can either choose to contest the allegations contained in the complaint or admit to them. In a straightforward case where the allegation is failure to pay your mortgage without any extenuating circumstances, you may have a difficult time contesting to the complaint.
There are some situations where contesting makes sense: Your lending institution might not be able to prove they own the loan, they may have mishandled your mortgage, or they may not have followed the appropriate state foreclosure procedures. We can make recommendations on how to respond to a foreclosure complaint and whether contesting makes sense for your case.
If no answer is filed, if you do not contest the charges, or if a contesting effort fails, your lending institution will seek the entry of final judgment, or the ability to foreclose and initiate the sale of the property. You will get one final chance to cure the mortgage in a 14-day window before the final judgment is sought.
The auction of the property, called a sheriff sale, is in many cases the last chance for you to pursue foreclosure relief. If a sale date has been set, immediately contact a lawyer to discuss your options. You do have the right to “redeem” your home in New Jersey, meaning you have a 10-day window to sell or refinance the property in order to keep it despite a sale.
If you do not intend to fight to keep your home, you may be inclined to just let a foreclosure play out. However, you should still speak to an attorney. Should a sale of the foreclosed property occur at a total valued less than what you still owe on the mortgage, you can be sued for a deficiency judgment. In other words, you may still be on the hook for the difference between the sale price and your overall debt. A qualified legal representative can evaluate the risk of a deficiency judgment and help you take steps to minimize your liability.
How Bankruptcy Can Save Your Home in New Jersey
Should direct negotiations with your mortgage lender fail to produce an agreeable compromise, you may need to consider indirect options. You may be eligible to file a bankruptcy petition and propose a plan to address your mortgage loan as part of your case.
Bankruptcy can be leveraged to halt an imminent or ongoing foreclosure. When you file your petition with the court, you are promptly granted an “automatic stay,” a court order that freezes any and all collection actions, including foreclosure. It is possible to initiate a bankruptcy to stop a foreclosure just before a sale takes place.
Absent a court order, creditors will not be able to initiate or continue the foreclosure process until your bankruptcy has concluded. For a Chapter 13 bankruptcy, that means you could have up to 5 years to prepare and reorganize your finances.
If you are considering Chapter 7 bankruptcy, you may have heard about liquidation and are worried about losing your home during this part of the process. Only nonexempt assets are subject to liquidation and, luckily exemptions exist to safeguard your home.
At the conclusion of any bankruptcy filing, you are typically able to discharge unsecured debts. This means you will no longer have to repay any remaining credit card bills, medical bills, unpaid utility bills, or personal loans. Bankruptcy does not enable you to discharge secured debts, including mortgage payments. However, the ability to discharge other types of debt can give you the ability to redirect funds toward your mortgage. Furthermore, in a Chapter 13 bankruptcy, some of your consolidated payment plan will go toward your mortgage payments, reducing your overall balance.
Our Howell foreclosure defense lawyer at Fedoroff Firm, LLC can help you understand how bankruptcy can defend against foreclosure and get you the debt relief that you need. We can review your unique circumstances, including your goals for the foreclosed property, and recommend options that are most likely to prove effective. We are intimately familiar with how foreclosure cases operate in New Jersey and are compassionate to the anxiety you are likely experiencing. No matter where your property is in the foreclosure process, our team can act quickly and decisively to identify solutions and save your home.