If you fall behind on your mortgage, don’t be surprised if you receive a letter or phone call from your bank within the week. After the financial meltdown and subprime mortgage crisis that imploded in 2008, banks are more vigilant than ever in trying to avoid problems associated with homeowners who have trouble paying their mortgages. While some banks are willing to work with homeowners, many are not. Worse, many “string you along” with promises of “loan modifications” that do not come to pass. As a result, homeowners are often faced with the prospect of losing their homes when banks refuse to refinance home loans or to work with them. We have seen this all too often..
Bankruptcy Can Help You Avoid Foreclosure on Your Southampton Home
Under both Chapter 7 and Chapter 13 bankruptcy, once you file for bankruptcy your bank must halt foreclosure proceedings against you. When you file for bankruptcy, an automatic stay of relief is issued, acting as an injunction to prevent any attempt on the part of creditors to collect debts or enforce liens. The automatic stay of relief typically extends includes foreclosure, providing homeowners with a certain amount of time in which to put their financial situation in order.
Bankruptcy, Foreclosure and the Automatic Stay of Relief
In Southampton and Shamong Townships, once you file for Chapter 7 or Chapter 13 bankruptcy, the automatic stay goes into effect; as such, you are not required to file a separate petition to prevent foreclosure on your home. However, it is important that you be able to bring your mortgage current over time (Chap 13) or (in Chapter 7) be current and stay current on your mortgage at the time of your bankruptcy filing. If you are behind on your mortgage, or in Chapter 13 if you do not stay current after filing, most likely the bank will ask the court for a “relief from automatic stay.” If a relief from stay is issued, foreclosure proceedings can proceed against you or continue.
However, if you are behind on your mortgage, it’s not a foregone conclusion that you will lose your house. First in a Chapter 13, if you have available “disposable income” you can take up to 60 months interest-free to bring the loan current. Or you can still ask for a loan modification while using a bankruptcy to stop the immediate threat of foreclosure. What you cannot do is simply wait! Another possibility is to make use of the New Jersey Superior Court’s Foreclosure Mediation Program. Through the mediation process, you may be able to prevent foreclosure on your home.
Preventing Foreclosure in Southampton and Shamong Townships
Once you file for bankruptcy, you should have additional monthly disposable income to make mortgage payments on your home. In Chapter 7 bankruptcy, your unsecured debts — credit cards, certain kinds of loans or medical bills — will be wiped clean. As a result, you should have additional funds to pay your mortgage.
In a Chapter 13 bankruptcy, you must submit a repayment plan to the bankruptcy trustee for final approval by the court. Once approved, you can potentially take up to five years to bring your mortgage current and pay what you can afford for most other debts. To see if this works for you, you need to meet with us so we can discuss all the “ins and outs”.
Contact Southampton Bankruptcy Attorneys at Neuner & Ventura, LLP
If you’re facing foreclosure or are worried that you’ll fall behind on your mortgage in the near future, contact Southampton bankruptcy attorneys at Neuner & Ventura, LLP, to learn how we can help you keep your home. Let us help you take back control of your life.