Bankruptcy and Foreclosure: Understanding Your Options in New Jersey

Filing for bankruptcy can indeed halt a foreclosure on your home in New Jersey, at least temporarily, due to the imposition of an automatic stay. This court-issued order requires all creditors to cease collection actions immediately, which includes postponing any scheduled foreclosure sales while the bankruptcy is pending, typically providing a reprieve of three to four months. However, the lender may ask the bankruptcy court to lift the stay regarding your home, and if the judge agrees, this postponement benefit could be lost. Additionally, if notice of a foreclosure sale has been given, filing for bankruptcy does not stop the clock on this notice period.

Specifically, a Chapter 13 bankruptcy, which is a reorganization bankruptcy, can be particularly potent as it stops foreclosure and sheriff’s sales, prevents repossession, and utility shutoffs. It requires the debtor to have a regular income as they will be paying both their monthly living expenses and a court-structured repayment of consolidated debts over a 3 to 5-year period. This type of bankruptcy allows you to catch up on secured debts like your mortgage, potentially enabling you to avoid foreclosure altogether.

Implications and Benefits of Chapter 13 Bankruptcy:

• Stop Foreclosure and Sheriff Sales: Filing a Chapter 13 bankruptcy will halt the foreclosure or sheriff’s sale as long as the bankruptcy is active.
• Creditor Harassment: Upon filing, creditors must stop calling or contacting you, offering peace of mind and the space to reorganize your finances.
• Asset Protection: Filing can help save your car from repossession and stop utility shutoffs, providing a comprehensive shield against creditor actions.
• Debt Relief: Certain debts, such as credit card debts, pay-day loans, and medical bills, can be restructured or eliminated, reducing your financial burden.

Seeking Legal Guidance: It’s crucial to discuss your situation with an experienced bankruptcy attorney who can provide personalized advice and help you understand the full range of your options and the implications for your particular circumstances.

For homeowners facing foreclosure in New Jersey, bankruptcy can offer a strategic reprieve and a structured path to financial recovery. Engaging with a knowledgeable attorney can help you navigate this complex process and protect your home. Call us today at (973) 500-8024 or (212) 960-8308, or submit your contact information below and we can contact you directly.