IF THE MORTGAGE COMPANY STARTS FORECLOSURES, DON’T DELAY IN FILING CHAPTER 13?
Many clients come to Mr. Taieb’s office and assume that since they are in the process of a loan modification the mortgage company will stop foreclosure. In certain cases the papers saying foreclosure will be delayed, but TAIEBLAW has seen too many potential clients burned by relying on the mortgage company.
As we have stated over and over, a bankruptcy petition creates a stay, which stops foreclosure. In the State of New Jersey there is what is known as the gavel rule. What this means is that once your home goes to sheriff sale it is almost impossible to save your home. If you file chapter 13 during the 10 day redemption period, section 108 (b) of the bankruptcy code gives you 60 days to refinance or do what you are allowed under the State law.
However, the bottom line is that mortgage companies do not usually refinance people in foreclosure and since you are so limited with time, you are obligated to also get Court approval when you are in Chapter 13.
Thus, if you want an opportunity to try to save your home, you want to make sure that you file the Chapter 13 petition BEFORE the date of the sheriff sale. If you delay or rely on the mortgage company to postpone the sale it can have devastating effects and you will lose your home.
Under the law, you only have 2 (two) week postponements which too many people waste. Thus, if you are in foreclosure and the mortgage company is not accepting your documents and is proceeding with foreclosure, do no delay.
Another reason you should file once the mortgage company starts foreclosure is that you have a much better chance of saving the home by doing a plan that cures the arrears over 5 years. Even if you file a plan to cure the arrears, you then have the opportunity to seek a loan modification while in bankruptcy.
In contrast, if you do a plan that relies on a loan modification then if you don’t get the loan modification you will not be able to save the home.
Thus, do not delay and play with the mortgage company yourself. If the mortgage company starts foreclosure, contact TAIEBLAW to file a Chapter 13 petition if you want to save your home.
If you have questions regarding this matter or any other matter contact TAIEBLAW at 856-235-4994, or visit our website at TAIEBLAW.COM.
Steven N. Taieb, Esq. has been a South Jersey Bankruptcy Attorney for over 33 years and is board certified in consumer bankruptcy law by The American Board of Certification which is accredited by The American Bar Association.