Homeowners can face foreclosure of their homes for multiple reasons. They may not be able to keep up with mortgage payments due to losing their main source of income or to being hit unexpectedly with large expenses, such as medical bills for a catastrophic accident or illness not covered by insurance. Filing a Chapter 13 bankruptcy offers a way keep your home while catching up on past-due mortgage payments.

One of the most significant advantages of a Chapter 13 bankruptcy is the immediate effect it has on foreclosure proceedings. Upon filing, an automatic stay goes into effect, halting all collection efforts from creditors, including foreclosure. This means that even if your home is scheduled for auction, the sale will be postponed, granting you valuable breathing room. This temporary pause allows you to focus on developing a strategy to catch up on missed payments and potentially save your home.

Chapter 13 bankruptcy involves creating a court-approved repayment plan that lasts three or five years. This plan establishes a monthly payment schedule that will allow you to:

• Catch up on missed mortgage payments — The plan will incorporate your past-due mortgage payments and spread them out over the course of the plan duration, allowing you to gradually get back on track.

• Make your current mortgage payments — You must continue making your ongoing monthly mortgage payments while adhering to the plan. Failure to do so can result in the automatic stay being lifted and foreclosure proceedings resuming.

• Pay back a portion of your other unsecured debts — While not all debts are covered in a Chapter 13 repayment plan, a portion of your other unsecured debts, such as credit card balances, can be included. This allows you to address a broader range of financial obligations in a comprehensive, manageable way.

Not everyone qualifies for Chapter 13 bankruptcy. Income limitations and debt thresholds might restrict your eligibility. An experienced bankruptcy attorney can assess your situation and determine if Chapter 13 is the right course of action. Individuals facing foreclosure may have other options, including negotiating a payment plan or loan modification with the lender. If Chapter 13 is determined to be the best route, your attorney can assist you in creating a realistic and achievable repayment plan and ensure that your rights are protected throughout the process.

The Law Offices of James C. Zimmermann has a long record of success helping New Jersey clients in bankruptcy and foreclosure matters. We have offices conveniently located in Vernon, Wayne, Pompton Lakes, Hackensack and Nutley. Call 973-764-1633 or contact us online for a free consultation.