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Chapter 13 bankruptcies may prevent losses in foreclosures

If New Jersey homeowners default on mortgage payments, the consequences can add thousands of dollars to the outstanding amounts of their loans. Along with an adverse impact on the homeowners' credit scores, fees for late payments and other charges related to the defaults will appear on their mortgage bills. If appropriate steps are not taken, the mortgage holders may proceed with foreclosures.

Fees related to the default can include the costs of property inspection, preservation services if the property is left unattended, and foreclosure costs such as the legal fees and administrative fees for title searching, posting and mailing of foreclosure notices. Defaults on mortgages are also reported to credit bureaus. This may negatively impact a homeowner's chances of obtaining a future loan, as well as the interest rates to which such a loan may be subjected.

Once foreclosure proceedings are started, the added fees will make it even more difficult to bring the status of the mortgage account current. Also, such a filing will be on public record and can further minimize the person's chances of obtaining any further loans or mortgages. An individual facing foreclosure may benefit by exploring possible remedies.

Consulting with a New Jersey bankruptcy attorney who is experienced in handling foreclosures may be the best step to take. If no other way can be found to bring the loan account current, the protection offered by a Chapter 13 bankruptcy might provide the necessary relief. A Chapter 13 filing halts foreclosure proceedings, and the homeowner will be allowed to pay the mortgage over an extended period of three to five years pursuant to a court-approved repayment plan.

Source: consumer.ftc.gov, "Trouble Paying Your Mortgage?", Accessed on Dec. 26, 2015

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