The foreclosure process in New Jersey is very long compared to other states. Some time ago, the New Jersey supreme court ceased all foreclosure actions for a period of about one year. However, the one year stay was terminated and the court’s, again, permitted foreclosures to commence and continue. The stay and the substantial number of foreclosure filings caused a backlog of the the court system, the sheriff’s sale administration, and a longer foreclosure process. Presently, the backlog has diminished and the time period for the foreclosure process, from initial filing, to the sheriff’s sale, is reduced.
With few exceptions, any bankruptcy filing will stay a sheriff’s sale, if the bankruptcy petition is filed prior to the sale.
However, only a chapter 13 and chapter 11 bankruptcy case allows a person the ability to save their house from foreclosure. Unlike a chapter 7, these chapters permit the debtor to cure the mortgage arrears over a certain time period. Typically, a chapter 13 and chapter 11 debtor must meet specific financial criteria and have the capability to cure their arrears, in addition to making their future monthly mortgage payments. In the alternative, the debtor may apply for a loan modification, within the chapter 13 case.
Although a chapter 7 stops the sheriff’s sale, if the debtor is in default with the mortgage, the court will permit the mortgage company permission to proceed with the sheriff’s sale, pursuant to the mortgage company’s motion requesting same. Under these circumstances, the chapter 7 will extend the time that the debtors can reside in the property.
Robert Manchel can be contacted at (866) 503-5655 if you have bankruptcy related questions.