Foreclosure is a legal process in which the lender seizes a home. This typically takes place when you have defaulted on the mortgage loan repayment. The Q3 2022 US Foreclosure Market Report shows that there were 92,634 properties with foreclosure filings like bank repossessions which were up by 3% from the past quarter. The process is quite scary and overwhelming at the same time. A foreclosure also drops your credit score by 100 points and you may lose the downpayment made during the initial property purchase.
Homeowners in New Jersey must have a clear understanding of foreclosure. This lets them freely exercise their rights. For instance, you can strategize the debt payment with the help of a lawyer who can ensure repossession and present you in lawsuits, if needed. Read on to know more about making informed choices.
1. Filing a Bankruptcy
This can put a stop to the foreclosure processes in NJ. The federal Fair Debt Collection Practices Act (FDCPA) also gives you the right to force a debt collector to avoid contacting you. Chapter 13 Bankruptcy can specially offer relief and allow you to clear the outstanding balance in the following 3 to 5 years. You may also get a modification done to the loan under this bankruptcy protection. It is a good idea to work with a specialized lawyer.
2. Breach Letter
The purpose of this letter is to inform you that the due dates are being missed. It is a critical step before proceeding with foreclosure. This notification is mandatory to be provided when the loan terms are being violated. It must mention the debt non-compliance and how exactly the lenders’ rights are being ‘breached’ by you. You may contact an attorney if a breach letter was not sent to you as a part of the loan contract.
3. Sheriff Sale
Sheriff sales are resumed in New Jersey as of September 2021 after being on hold during the COVID-19 pandemic. This is an activity where your home can be sold to the highest bidder in an auction. It is locally conducted at a county level where multi-family homes, mixed-use properties and even commercial buildings are auctioned off. The NJ local requires a sale to be conducted within 150 days instead of the usual 120 days. The lender can come for you if the profit made is less than the foreclosure debt amount.
4. Restricted to Real Estate
Lenders like credit unions and banks can only take ownership of the mortgaged property. They are not legally permitted to ‘extort’ money from other assets. All of these are only applicable when the debt obligations are not being followed. If required, they will have to file a fresh lawsuit for the loan balance. But this rarely takes place in NJ.
5. Contents of a Foreclosed House
You may take all personal possessions with you before leaving the property. This includes jewelry, furniture, important documents and appliances. If you do not do so, the belongings will be sent to storage. But know that permanent fixtures like plumbing, ceiling fans or window treatments cannot be removed. This is because it can cause physical damage and hamper equity.
An experienced lawyer can represent you on the most compassionate and competent terms. They discuss all options, even out-of-court ones, with you and implement the one that suits the best. This way bankruptcy can be a fresh start instead of a big failure.