Foreclosure Protection in New Jersey Chapter 7 Personal Bankruptcy Cases

While filing for Chapter 7 bankruptcy in New Jersey can provide an appealing way to wipe out potentially burdensome consumer debts, it will not completely eliminate your secured debts, that is, debt that is secured by specific property, such as your home mortgage.

This can be extremely frightening for many individuals considering Chapter 7 bankruptcy and can even prevent many individuals from seeking much-needed help. Foreclosure protection in New Jersey Chapter 7 personal bankruptcy cases is possible, however. A skilled attorney can help you get the protection against foreclosure that you may need while resolving your bankruptcy case.

How Does Chapter 7 Bankruptcy Work?

Chapter 7 personal bankruptcy functions to eliminate most consumer debts, such as credit card debt and unsecured loans. However, when a loan is secured by a specific piece of property, the lender remains entitled to try to repossess or, in the case of a home, foreclose on the property after the case is resolved. Even though the debt will technically be eliminated through the bankruptcy process, the creditor’s right to foreclose remains. Generally, the bankruptcy trustee will not sell a person’s home or their other non-exempt assets.

The creditor’s right to act against a debtor is eliminated (or stayed) from the filing of their bankruptcy petition until their case is resolved (this is known as the automatic stay). If a home is already in foreclosure once bankruptcy proceedings commence, the process is frozen in place. However, the following exceptions may apply:

The mortgage company may contact the court and obtain permission to continue with the foreclosure action and this permission may be granted. After receiving this permission, the foreclosure action is unfrozen and can continue where it left off, until the house is eventually sold.
The mortgage company can proceed with the foreclosure if someone already received a notice of foreclosure specifying the period after which the foreclosure will occur if the lender receives court permission to lift the automatic stay.

Foreclosure protection in New Jersey Chapter 7 personal bankruptcy cases can become extremely important in these cases.

Foreclosure Protection Options in New Jersey

Filing for Chapter 7 bankruptcy while a home is in foreclosure can help a person avoid liability for a deficiency judgment. This is essentially an amount they may owe if the bank sells their home for less than the amount owed through the foreclosure process, and then sues the owner for the difference. Chapter 7 bankruptcy can protect a person from liability stemming from this process.

Foreclosure protection in New Jersey Chapter 7 personal bankruptcy cases will typically require legal assistance since the options can be complicated. A bankruptcy attorney can help with the process, which can involve loan modification, deeds in lieu of foreclosure, or mediation options.

Reach Out to a Bankruptcy Attorney Today for Help with Foreclosure Protection in New Jersey Chapter 7 Personal Bankruptcy Cases

It is, however, important that you contact help as soon as possible in these cases to take advantage of the Chapter 7 automatic stay while it is in effect. This time can be used to apply for a direct loan modification with your mortgage company which is a process that can be frustrating if you are not familiar with the issues that may arise, or to use New Jersey’s foreclosure mediation program to try to keep your home.

Call to ask an attorney about foreclosure protection in New Jersey Chapter 7 personally bankruptcy cases. A lawyer can help you find a solution that can be the best for your family under the circumstances.