Most people facing foreclosure in Hammonton are reluctant to seriously consider bankruptcy as a way to avoid losing their home. If you’ve fallen behind on your mortgage and are struggling to pay even the minimum amount due on your credit cards every month, filing for Chapter 7 or Chapter 13 bankruptcy may be the most effective way to get out of debt while saving your home.
Once you file for Chapter 7 or Chapter 13 bankruptcy, an automatic stay is issued requiring debt collectors and banks to halt all collection and foreclosure actions against you. While the stay is only temporary, it can provide you with enough time to put your finances in order so you can begin making monthly mortgage payments again to avoid foreclosure.
Filing for Chapter 7 Bankruptcy in Hammonton, New Jersey
Filing under the terms of Chapter 7 bankruptcy allows you to wipe out your unsecured debt — credit cards, certain kinds of loans, medical bills, even back taxes in certain situations. However, in order to file under Chapter 7 your income cannot exceed the New Jersey median income for homes similar in size to yours.
If at first you don’t meet the income requirements for Chapter 7, you may still qualify once certain exemptions are taken into account. The formula used in taking into consideration various exemptions can be complicated. As such, it’s important to work with an experienced Chapter 7 bankruptcy attorney in Hammonton who can ensure you qualify for Chapter 7 if you don’t initially.
Filing for Chapter 13 Bankruptcy in Hammonton, New Jersey
If you don’t qualify for Chapter 7 bankruptcy, you can file under the terms of Chapter 13. Under Chapter 13, you’ll be required to create a repayment plan that consolidates your unsecured debt into a single monthly payment. If the bankruptcy court approves your repayment plan, your bankruptcy trustee will allocate funds from your monthly payment to your different creditors. Additionally, once approved by the court, your creditors must accept the terms of your repayment plan and cannot pursue collection actions against you.
Under Chapter 13, most repayment plans are approved for a period of three to five years. Once you’ve completed your repayment plan, any remaining unsecured debt will be wiped clean as in a Chapter 7 bankruptcy. Further, under Chapter 13 you can “lien strip” a second mortgage if you have one, discharging it as well.
Bankruptcy and Foreclosure
While you cannot discharge debt on back-owed mortgage payments through bankruptcy, you should have additional money available every month to pay your mortgage once your Chapter 7 or Chapter 13 bankruptcy is approved. In this way, you can get back on your financial feet again while avoiding foreclosure through filing for bankruptcy.
While bankruptcy typically stays on your credit report for anywhere from seven to 10 years, you can still qualify for credit cards and loans after filing for bankruptcy. The interest rate offered will be higher and you may initially only qualify for a secured credit card. Even so, the long-term consequences of losing your home and paying fees, fines and interest on large credit card debts are often more substantial than filing for bankruptcy.
Contact Hammonton, New Jersey, Bankruptcy Attorneys
If you are facing insurmountable credit card debt and are in danger of falling behind on your mortgage, contact Hammonton bankruptcy attorneys at Neuner & Ventura, LLP, today to learn how we can help you.
*Free consultation for individuals and most small businesses. A follow up meeting may be required. We reserve the right to charge for consultations involving review of existing cases, divorces or litigation.