According to recent data, New Jersey is still suffering from the effects of the 2008 recession. According to RealtyTrac, the number of homes in foreclosure in the state during 2013 increased 25.5 percent over what it was before the recession during 2007. Overall, New Jersey ranked as the state with the 13th highest foreclosure rate, with 3.5 million foreclosure filings during 2013.
As most other states saw a decline in foreclosures, experts say that the high rate in New Jersey is largely due to an enormous backlog of foreclosures that have not been completed, due to a moratorium on foreclosures that was lifted in 2012. As a result, it is predicted that it will take until 2015 before the rate returns to normal.
Bankruptcy may help
If you are one of the millions of residents in the Garden State that are facing foreclosure, bankruptcy, especially Chapter 13, may be a solution to the problem. Once bankruptcy has been filed, the automatic stay goes into effect, which pauses foreclosure and other creditor attempts to collect a debt.
If Chapter 13 is filed, all of your debts are consolidated into a repayment plan. Under the plan, you make monthly payments towards your debts over a three to five-year period. As the monthly payment amount is based on your disposable income, it is kept affordable. As long as you make payments each month, your mortgage lender is prohibited by the court from recommencing foreclosure proceedings.
Under the Chapter 13 plan, each monthly payment is applied towards the payment of your debts. However, not all debt must be repaid in full before the repayment period has been completed. Under the bankruptcy laws, your secured creditors (e.g. mortgage lenders or car finance companies) are paid first. As a result, Chapter 13 allows you to catch up on the back payments that you owe to your mortgage lender over the repayment period.
Once the secured creditors have been paid, any amount remaining of the monthly payment may be directed towards the payment of your unsecured debt (e.g. medical bills and credit card companies). Any unsecured debt that has not been repaid in full at the end of the repayment period is discharged. As a result, you emerge from bankruptcy current on your secured debt and free of your unsecured debt, allowing you to have a fresh start.
An attorney can advise you
Chapter 13 bankruptcy has its own qualification requirements and is not the best or only solution for everyone. If you are contemplating bankruptcy as a means to prevent the foreclosure of your home, it is wise to first consult with an experienced bankruptcy attorney. An attorney can fully advise you of how bankruptcy would affect your situation and recommend the debt-relief solution that would be best for you.