Can a Bankruptcy Filing Help You Sell Your Home?
Sometimes, homeowners are prevented from selling their home because of unpaid judgments. Normally, these judgments have to paid or satisfied for a home-seller to deliver clear title to the buyer. But the judgments may make that impossible. That is where a bankruptcy can come in.
Any bankruptcy will normally result in a discharge of debts, including most that have been reduced to judgment. In a bankruptcy, the debtor/homeowner has the power to “avoid” judgments under certain limitations. In Chapter 7 bankruptcies, this is done by filing a motion for “lien avoidance”. In Chapter 13, in New Jersey, judgments can be avoided under an approved Chapter 13 Plan. Once all the payments are made, the court can enter an order avoiding and removing the judgments, even if they have not been fully paid.
Judgments are only avoided to the extent that they “impair” the debtor’s right to exempt the value of the home. If the value of the home, minus the total of all mortgages and judgments, minus the amount that can be claimed as exempt, is a positive value, the judgment might not be subject to being totally avoided.
In New Jersey, those who have received a bankruptcy discharge more than 12 months ago can file a state court motion to “cancel” judgments. This is an alternative that may work well for many people.
Using a Chapter 13 Petition to Avoid having to sell your home
A Chapter 13 Bankruptcy can be used to bring a mortgage current and to stop judgment holders or other creditors from demanding or seizing your income. In this way, a sale of the home may not be needed. See our other blog articles where this is discussed.
Contact Neuner & Ventura, LLP
At Neuner & Ventura, LLP, we provide a free initial consultation to every client. We do, however, reserve the right to charge a fee to review any work done by another attorney. To set up an appointment, call our office at (856) 596-2828 or send us an e-mail. Evening and weekend appointments are available upon request.
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