Does Chapter 13 Protect Your Home from Foreclosure?

Losing your home to foreclosure can happen quickly even when you’re earning a steady income. If you or a loved one suffers a serious illness and faces extensive medical bills not covered by insurance, you may not be able to keep up with mortgage payments. And depending on your lender, it may take only three or four missed payments for them to act. Under the New Jersey Foreclosure Act , your lender is required to send you a notice of intent to foreclose between 30 and 180 days before filing a foreclosure action with the court. You then have 30 days to bring your account up to date. But filing Chapter 13 bankruptcy offers a way keep your house while catching up on past-due mortgage payments through a repayment plan.

Filing Chapter 13 will trigger an automatic stay that stops all collection actions by your creditors — including your mortgage lender. Even if your house is already in foreclosure, filing Chapter 13 will stop those proceedings. In either case, you must continue to make monthly mortgage payments while you catch up on arrears. So if you want to keep your home and you have a steady income, Chapter 13 may help you to do that.

It’s important to know that Chapter 13 can’t prevent foreclosure in all cases. It does not protect you from losing your home due to:

• A foreclosure sale that is completed before you file for Chapter 13
• Failure to make mortgage payments after the Chapter 13 filing

Individuals facing foreclosure may have other options — including negotiating a payment plan or loan modification with the lender — that they should explore with the help of an experienced bankruptcy attorney.  Whether the route you take is negotiating with your lender or filing Chapter 13, it’s important to act quickly and get legal advice that will improve your chances of keeping your home.

For more than 25 years, the Law Offices of James C. Zimmermann has successfully advised New Jersey clients in bankruptcy and foreclosure matters. Call us at 973-764-1633 or contact us online. We have offices conveniently located in Vernon, Wayne, Pompton Lakes, Hackensack and Nutley, New Jersey.