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Chapter 7 v. Chapter 13? - or - Facing Foreclosure?


  Chapter 7 Bankruptcy: Bankruptcy via chapter 7 will clean your debt (and give you a fresh start at life) with some exceptions of those debts which cannot be discharged (such as child support, alimony, and student loans. There are more though). In Chapter 7 bankruptcy, your asset will be liquidated and sold by a trustee to settle your creditors. The trustee got to be paid too (some commission). A lot more goes on with this process and there is a lot to know about Chapter 7 bankruptcy law in New Jersey.

  Chapter 13 Bankruptcy: In chapter 13 bankruptcy, however, you (as the debtor) will propose some repayment plans to your creditors. You offer to pay off all or part of your debts (usually from 3 to 5 years) from your future income. Hence, to qualify for chapter 13 bankruptcy, you must have a regular source of income and a disposable income you can apply towards the repayment plan you offer. Chapter 13 fillers are normally trying to avoid house foreclosure, etc. A lot more goes on with this process and there is a lot to know about Chapter 13 bankruptcy law in New Jersey.


  As a homeowner, you are called the mortgagor (a.k.a - the borrower). The financial institution (for example, the bank) you borrowed from is called the mortgagee (a.k.a - the creditor). Homeowners who are unable to pay their mortgages may face the unfortunate situation of foreclosure, which is simply a way of saying that your creditor wants the house back since you cannot pay. Unfortunately, they may have the right to do that.

However, New Jersey foreclosure law accords you some rights and options to ease your tension. For example, New Jersey's Fair Foreclosure Act (N.J.S.A. 2A:50-56) gives you (the homeowner) the right to mitigate the loss of your home. One such right is that the bank or your creditor (mortgagee) must first send you a document entitled: “Notice of Intent to Foreclose.” Your creditor is required by New Jersey Bankruptcy law to send or serve you this document at least thirty days prior to filing a foreclosure complaint in court.

Therefore, it is safe to say that "Notice of Intent to Foreclose" is the first step down the line to foreclose a home in New Jersey. Foreclosure, although an arduous process, the notice of intent to foreclose document at least gives you an opportunity to take necessary measures to correct the deficiency on your mortgage. A lot goes on after this process if you fail to take those necessary steps to stop the foreclosure. And the good news is that you may still have some options. Call us today!

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