The family home is the greatest single asset for many people, but it’s common for houses to be heavily mortgaged, putting overwhelming strain on the owners’ ability to keep up with payments. This can lead to foreclosure, which is a legal action by a lender to force a sale of the home to satisfy the debt. A foreclosure can evict you from your home and can do severe damage to your credit. If you find yourself in this situation, there are remedies available.

You may be able to avoid foreclosure of your home through bankruptcy, a short sale of the property or a deed in lieu of foreclosure. A bankruptcy attorney knows how to help with these each of these options.

Bankruptcy

Bankruptcy stops the foreclosure by imposing a temporary automatic stay on debt collection efforts immediately upon the filing of the petition. This gives you the chance to work out a mortgage payment plan that might let you keep your home. Lenders will usually prefer to have you as a paying customer than trying to sell an empty house. However, bankruptcy can also affect your credit.

A Chapter 13 bankruptcy is particularly well-suited to helping you keep your home. It is designed to restructure and reorganize your unsecured debts — including mortgage arrears — so you can pay them off over a period of three to five years.

Short Sale

A short sale occurs when the owner sells the home for a net sales price that is less than what is owed to the mortgage lender.

The principal benefit of a short sale is that the owner can walk away from the mortgage without fear of a deficiency judgment, which could be obtained if the lender forecloses and recovers less than the outstanding loan balance. Even though a short sale can negatively affect your credit, it will do less damage than a foreclosure. However, the lender must agree to the sale terms.

Short sales may be conducted in sync with a Chapter 7 bankruptcy. Through a court order, the primary lender can gain authority to sell the property free and clear of junior liens. The lender will often settle for this lack of full payment to ensure they make as much as they can from the sale of the home

Deed in Lieu of Foreclosure

A deed in lieu of foreclosure is another potential option to avoid foreclosure. Instead of waiting for the bank to foreclose to get the home, you can deed the property to the bank voluntarily. The bank saves money and you avoid having a foreclosure on your credit history.

At the Law Offices of James C. Zimmermann, we have decades of experience assisting New Jersey residents in finding debt-relief solutions. We can help you find the right option to avoid foreclosure of your home. Call us at 973-764-1633 or contact us online for a free initial consultation. We have offices in Wayne, Vernon, Pompton Lakes, Hackensack, and Nutley.