Filing Bankruptcy and Keeping the House
Sussex County bankruptcy lawyer advises on ways to prevent loss of your home
Unfortunate financial circumstances cause many people to fall behind on their mortgages secured by their homes and other debts. When foreclosure looms, and even after a foreclosure action is filed, bankruptcy might be the answer. The Law Offices of James C. Zimmermann can provide insight on ways you can keep your house while obtaining bankruptcy relief.
Factors that determine whether you keep your home
Whether and how you are able to keep your house in a personal bankruptcy depends on a number of factors, including:
- The value of the property
- The amount due on your mortgages, home equity loans and other debts secured by liens
- The amount of your home’s equity (the difference between your home’s value and what you still owe on debts secured by mortgages and liens on the home)
- Whether you are up-to-date on your payments
- The amount of your homestead exemption, if any
- Which type of bankruptcy you file
Analyzing these factors can be complex, but we’ll give you an informed assessment about what might happen to your home under various scenarios before you decide whether to file for bankruptcy.
New Jersey equity exemptions to protect your home
New Jersey does not have a state homestead exemption, but you may use the federal one, which is currently $31,575. If your home equity is less than the homestead exemption, you will not need to worry about losing your home.
Keeping your house with Chapter 13
Often, a Chapter 13 bankruptcy is the best way to keep your house, especially if you’re behind on your mortgage payments. It requires you to submit to a three- to five-year debt repayment plan, which you may use to bring and keep your mortgage obligations current. To the extent that any portion of your home equity is exempt from bankruptcy, it will reduce the amount you must pay on the mortgage and liens. If you have more than one mortgage or lien on your property and the senior one is larger than the non-exempt portion of your home equity, we might be able to convince the court to remove the junior liens.
Keeping your house under Chapter 7
If you avoid falling behind on your payments on your mortgage and other debts secured by your house, and the total amount of your home equity is exempt, a Chapter 7 bankruptcy is another way you may keep your house. However, if any part of your home equity is non-exempt, the bankruptcy trustee can sell your house and give you the amount of your exemption from the proceeds. We can help you determine if this is a viable option.
Foreclosure defense with bankruptcy
Filing for either Chapter 7 or 13 will, except in limited circumstances, impose an automatic stay on any efforts by your creditors to collect on your debts. Even if your home is already in foreclosure, the bankruptcy will pause that proceeding until either the bankruptcy is over or the bankruptcy court grants the lender or other foreclosing creditor relief from the automatic stay, authorizing it to proceed with the foreclosure. In the meantime, if you are in Chapter 13, you can make payments on the mortgage to eliminate the arrearages. You can also use Chapter 7’s automatic stay to delay the foreclosure. We will do everything we reasonably can to uphold the automatic stay and use bankruptcy to prevent foreclosure.
Contact a North Jersey bankruptcy lawyer for a free consultation
At the Law Offices of James C. Zimmermann we provide personalized advice to New Jersey clients on all types of issues relating to bankruptcy, including its effect on home ownership. For a free initial consultation, call 973-764-1633 or contact us online. Our offices are in Vernon, Wayne, Pompton Lakes, Hackensack and Nutley.
