As we enter into the first full week of May, many homeowners are facing the reality of not having the money to pay their mortgage. If they have just enough to pay the mortgage, with all the uncertainty of when the economy will return to a level of normalcy, many will be left with no choice but to keep the funds they have to pay for necessities like food and utilities. Speak to our New Jersey bankruptcy attorney to discuss your legal options.
Let the Lender Know if You're Having Trouble Making Payments
In the early stages of being unable to pay your mortgage, it is very important to contact the lender and explain your situation. Many to almost all mortgage companies will have programs that allow (on a short term basis) for non-payment or at least reduced payments each month on the current mortgage obligation. However every lender will have their own perspective on how much and how long they will work with the homeowner. That said, homeowners need to start evaluating what they want to do with the house going forward.
What if There's No Equity in the Home?
If the house has very little to no equity, then the homeowner may consider eventually walking away from the property. Foreclosure actions, which are civil actions/lawsuits to have the house sold for non-payment of the mortgage, usually take at least nine months to complete, and in the current pandemic, it is expected to take much longer than that. A homeowner can stay in their house up to the day of the sheriff sale. If the homeowner wishes to retain the house, they can attempt to work out an agreement with the lender to spread the missed payment amount over a period of time to pay it back, or they can have the arrears added to the principal balance and then paid off towards the end of the mortgage term.
If You Have Equity, You Have Options
If the home has some equity, but not over what can be exempted in a bankruptcy filing (i.e. there is an exemption in the Bankruptcy Code that allows for a fairly large amount of equity to be exempted from the Bankruptcy filing, thus allowing the homeowner to retain the house even with the equity), the homeowner can file a Chapter 13 Bankruptcy that would allow the arrears to the mortgage company to be paid off over the term of the Chapter 13 plan (typically between 36 and 60 months).
There is hope in the form of real options, as the fear is many homeowners will be facing tough times paying their mortgage starting in May and going forward.
A Skilled New Jersey Bankruptcy Attorney Can Help You When You Need it Most
Discussing your options with a New Jersey Chapter 7 and Chapter 13 bankruptcy lawyer as we navigate through and exit this historical event will allow consumers and small business owners to be informed of their choices and options under the Federal Bankruptcy Code.
It continues to be the hope of all involved with creditor/debtor rights that the private debt collection companies, mortgage companies, credit card companies, utility providers, car lending companies, unsecured loan providers, cell phone carriers, Internet/cable providers, etc. will offer options to help all consumers and small business owners catch up on late payments or restructure payments. However, if they do not, then all consumers and small business owners need to know their rights for debt relief through bankruptcy.
Discuss your options under Chapter 7 or Chapter 13 with one of our New Jersey bankruptcy attorneys in confidence. To schedule a free, no-obligation consultation at Helmer, Conley and Kasselman, call us at 609-281-8581 or tell us how we can help online today.