New Jersey Foreclosure Attorney

If at all possible, it’s best to avoid foreclosure on your home. If you lose your home through foreclosure, your credit will be adversely affected and a record of it will appear on your credit report/FICO for 10 years. Additionally, it can take 4 to 6 years to obtain financing again through the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Federal National Mortgage Association (Fannie Mae). Understanding the financial and legal issues involved in home foreclosure is essential in evaluating the options available to you. If you’ve fallen behind on your mortgage or are struggling to pay your monthly installment and other bills, contact our foreclosure help attorney.

Avoiding Foreclosure — Considering Your Options

Depending on your financial situation and the specifics of your mortgage, one of the following may be your best option for avoiding foreclosure:

• Loan modification
• Short sale
• Chapter 13 bankruptcy
• Lien stripping

Chapter 13 Bankruptcy and Foreclosure

People who don’t qualify for Chapter 7 bankruptcy usually have to file under Chapter 13. Unlike Chapter 7 bankruptcy which wipes out unsecured debt, Chapter 13 may require you to repay a percentage of what you owe over a 3- to 5-year period, depending upon your net monthly disposable income. You will be required to submit a repayment plan for approval by the court and your creditors.

As part of your repayment plan, you can include past-due mortgage payments and reduce other monthly bills into one manageable payment. Consequently, people who file Chapter 13 bankruptcy are often able to avoid foreclosure. Additionally, once you file for bankruptcy, an automatic stay is placed on any foreclosure or collection actions on the part of banks and creditors.

First and Second Mortgages and Foreclosures — Some Considerations

If you have a second mortgage on your home or you have taken out a home equity loan, certain considerations come into play if you decide to pursue a short sale in lieu of a foreclosure. In general, if you decide to work out a short sale with your lender, the bank can ask you to pay the difference between what you sold your house for and what you owed on your original mortgage.

However, if you have a second mortgage and aren’t protected by anti-deficiency provisions, the lender can pursue you for any losses it takes on your second mortgage. Depending on your situation, your second mortgage may be dis-chargeable in bankruptcy.