Dubiln Packard

Todd Murphy

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How can I save my home from foreclosure?

It’s possible in many cases to save your home despite periods of financial difficulty.

The steps that can be taken are:

Home Loan Modification. It might be possible to reduce the payments by extending the term of the loan, adjusting the interest payments, and in some cases reduce the principal balance on the mortgage, or some combination of these three. There is a threshold of qualification for modification.  The bank needs proof of ability to pay, with the principal and interest no greater than thirty percent of income after the refinancing. Loan modification requires full documentation and takes place at a closing, similar to a purchase or sale.

Chapter 13 bankruptcy. There are thresholds for qualification. The court requires a means test, establishing that you’ll have the ability to pay on a payment plan, making partial restitution to your creditors (often at a fraction of the balance due) with the debts discharged completely at the end of the payment plan. Your home can be protected. Second and third mortgages can become severed from the home and added to the pool of consumer debt covered by the payment plan.

Chapter 7 Bankruptcy If you have limited equity in the home and enough income to pay the mortgage, it might be possible to keep your home under Chapter 7 bankruptcy.

  • If you have a very high amount of consumer debt, like credit cards debts or payday loans, it can be nearly impossible to qualify for a loan modification or a chapter 13 bankruptcy. However, a chapter 7 bankruptcy can eliminate these consumer debts and as a result allow you to qualify for a loan modification or chapter 13 bankruptcy. This little trick of using a chapter 7 to qualify for a chapter 13 is referred to as a “chapter 20 bankruptcy.”
  • To learn more about how chapter 7 bankruptcy could be a good strategy for you, read our post: When Is A Chapter 7 Bankruptcy Useful? (P.S. It even goes over what to do if you can’t save your home, or don’t want to)

 

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New Jersey Real Estate Law

Todd Murphy Law practices all aspects of Real Estate Law in New Jersey.

  • Closings
    • Purchase
    • Sale
    • Refinance
    • Loan Modification
  • Easements and Variances
  • Condominium and CoOp Charters
  • Foreclosure Defense

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List of Approved Credit Counseling Agencies For New Jersey Bankruptcy

Approved Credit Counseling AgenciesOne of the requirements of filing personal bankruptcy in New Jersey is to complete two counseling or education courses.  These can be taken on-line or over the phone and take about twenty or thirty minutes to complete.  Below is a link to a list of approved credit counseling agencies for New Jersey Bankruptcy.

Click here for the List of Approved Credit Counseling Agencies For New Jersey Bankruptcy.

Why Do You Have To Take Credit Counseling Course For New Jersey Bankruptcy?

This requirement to file Bankruptcy in New Jersey came into effect as the result of a change in the US Bankruptcy Code in 2005.  Formally albeit somewhat misleadingly titled the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, the law essentially made it more difficult for individuals to file bankruptcy.

When Do I Take the Credit Counseling Course For New Jersey Bankruptcy?

Two courses are required: one prior to filing and one prior to discharge.  Your New Jersey Bankruptcy Lawyer will advise you when to take the two courses and provide you with a provider from which to take the course.  The link above takes you to a list of Court-approved providers.

How Do I Take the Credit Counseling Course For New Jersey Bankruptcy?

Many of the providers make it easy to take the course on-line or by phone in the comfort of your own home.  If you don’t have your own computer at home, you can take it at work or at the library.

Be Wary of Misleading Mail Solicitations.

Providing these courses is big business for some providers as they seek not just to sell you their course but also many other products such as high-risk car loans, high-fee credit cards, and so-called credit repair services.  Your mail box will fill up quickly immediately after you file with mis-leading letters and offers to these and other services.  You just took a very important step to clear your credit of nagging debts, be extremely careful before you  get yourself into new debts.  Most of these offers are risky at best.

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Will Bankruptcy Stop a Sheriff Sale?

Will Bankruptcy Stop A Sheriff SaleBankruptcy will stop a Sheriff sale provided a bankruptcy case filing number is provided to the Sheriff prior to the sale. So, Will Bankruptcy Stop A Sheriff Sale?  Yes.

Sheriff’s sales are the final event in the foreclosure process but sometimes, if an adjournment of the Sheriff sale cannot be obtained, the only way to stop the sale is with a bankruptcy filing.

If the property is placed in bankruptcy through a bankruptcy filing, the Sheriff is not permitted to proceed with the sale until the Sheriff receives further orders from the plaintiff’s attorney. The file is held in abeyance of the Court until the bankruptcy is dismissed or if there is a default on the defendant’s part.

If you have been attempting to get a loan modification and save your home from foreclosure, a chapter 13 bankruptcy may prove to be helpful by stopping the Sheriff’s sale  and obtaining a loan modification. In a Chapter 13 Bankruptcy filing, you will be permitted to catch-up on all of the arrears (missed payments as of the time of filing) over a 60-month period through a Chapter 13 plan and immediately start making your mortgage payments. Provided you have enough income to make those payments, there is no approval required from the bank, rather, your chapter 13 plan is confirmed by the bankruptcy court.  This is often extremely helpful in the case of a self-employed person who has been unable to convince a lender of the ability to pay.

Will Bankruptcy Stop A Sheriff Sale?  Yes.  Contact us to learn more.