Few things are more devastating to families than the prospect of foreclosure. You own your home and you love it — it serves you well. Yet, due to unfortunate circumstances, foreclosure may seem imminent.
Foreclosure can be an incredibly stressful experience for families in New Jersey who are facing this situation. The pressure can be almost unbearable, and the uncertainty of the process can cause considerable anxiety. Unfortunately, the foreclosure process can take several months or even years, which can prolong the pain and make it difficult for families to move on from the situation.
The good news is that families facing foreclosure in NJ have many available options, possibly more than they are aware of. There are numerous legal foreclosure avoidance strategies available that can assist families in New Jersey to overcome their foreclosure challenges and move forward with their lives. These strategies can be implemented to help resolve foreclosure issues and enable families to avoid the stress and financial burden associated with foreclosure.
This piece delineates three efficient approaches to steer clear of foreclosure in New Jersey. It’s crucial to acknowledge the existence of alternative methods for averting foreclosure, but this article emphasizes strategies that adhere to legal and ethical guidelines. The objective of these tactics is to alleviate the anxiety and exasperation associated with impending foreclosure while curtailing enduring financial liabilities. It’s essential to bear in mind that these methods may not be universally applicable, yet it’s probable that at least one of the trio of strategies expounded in this composition will offer assistance to households grappling with foreclosure concerns.
Strategy #1: Work out a deal with your lender
The first strategy to avoid foreclosure is known as a “foreclosure workout”. This approach involves meeting with your lender and expressing your inability to meet your current mortgage obligation. However, you also express your willingness to work with them to come up with a mutually agreeable solution that allows you to remain in your home and continue making mortgage payments. The aim is to negotiate new loan terms that are more affordable and manageable, such as a lower interest rate, longer loan term, or a reduced monthly payment. This approach requires good communication skills and a willingness to negotiate with your lender to find a workable solution that benefits both parties.
It is a common misconception that lenders prefer to foreclose on homes. In reality, lenders want their customers to be able to make their mortgage payments and keep their homes. Therefore, lenders are often open to negotiating with homeowners to find a solution that benefits both parties. This may involve a temporary pause in mortgage payments, a plan to catch up on missed payments, or restructuring the outstanding balance on the mortgage. The goal is to find a solution that helps you avoid foreclosure while still enabling the lender to recover their investment. Through a foreclosure workout, you can work with your lender to create a plan that works for both parties.
Strategy #2. Bankruptcy
Filing for bankruptcy is an option to consider when trying to avoid foreclosure. While it may seem extreme, it is one of the tools available in your foreclosure avoidance toolkit. When you file for bankruptcy, you are essentially informing your creditors that you are unable to pay your bills. This will put a halt to the foreclosure process, as all creditors are required to stop collection efforts. However, it is important to note that bankruptcy can have significant long-term consequences on your credit score and financial stability, and it should only be considered after exploring all other available options. Before making a decision, it is recommended to consult with a financial advisor or attorney to fully understand the potential consequences of filing for bankruptcy.
While filing for bankruptcy is an option to avoid foreclosure, it is considered an extreme measure. In a bankruptcy, you may be required to sell some of your assets to pay off your creditors. Additionally, a bankruptcy will remain on your credit report for several years, which can negatively impact your ability to obtain loans, cars, and even employment. Therefore, bankruptcy should not be your first choice when trying to avoid foreclosure. It is important to exhaust all other options before considering bankruptcy, as it can have significant long-term consequences.
Strategy #3. Short sale help for a foreclosure in New Jersey
A short sale is the third strategy — this is where you sell your home and put the proceeds of the sale toward the amount owing on your mortgage loan. A short sale is a preferred method for people facing foreclosure because it is proactive, fast, and very effective.
- It’s proactive, which means that you take matters into your own hands (that’s a major stress eliminator because so much of the stress of foreclosure comes from the process being completely out of your control).
- It’s fast — in some cases, you can sell your home in as little as a week! That’s also because it’s local: You can get help for foreclosure in New Jersey since organizations like MOJO HOUSE BUYERS help people going through short sales.
- It’s very effective because a short sale can completely wipe out (or almost wipe out) the amount owing on your mortgage. If there is any amount left over that is not covered by the sale of the property, you’ll be responsible for it (although you can sometimes work out a deal with your lender).
With a short sale, you still end up with the reality of having to leave your home but there is a bright side: The impact to your credit is much less (compared to a bankruptcy or a foreclosure) so this is a smart long-term play to give yourself some options.