NJ Mortgage Help for Single Parents

Going through a separation and divorce is never easy, but the complication level increases when you add children to the mix. Establishing a stable family life for your kids is something every good parent strives to do, and divorce can throw a wrench into even the best laid plans.

Supporting the expenses required as a newly single parent is a daunting task as you attempt to maintain as much constancy and normalcy for your children as possible. To that end, the marital/family home is most often where divorced parents elect for their children to remain living.

With that being said, finances don’t always stretch far enough for one parent on their own to pay the mortgage on that family home, along with all other monthly expenses. If both parents are able to pitch in financially to keep the children and one parent in the home, the chances of losing the home are lower. However, the threat of foreclosure for recently divorced single parents is real, and although frightening, it is not something that will go away if you ignore it.

If you are a single parent fighting to keep the home your children have thus far grown up in, you may be overwhelmed by the responsibility of making that monthly mortgage payment on your own. Missed payments are common after significant life events like job loss, illness, death, and, you guessed it – divorce.

The bank will never throw me out since I have young children, right?

Unfortunately, too many people simply give banks and lenders a lot more credit than they deserve. Your bank does not care if you have children, an elderly parent, three sick dogs and a chronic illness – their bottom line is money. You may think, “But there are people working at that bank; surely there is someone there with enough empathy to see that I am struggling.”

While that may be true – of course there are kind people working in banks and lending institutions – they must follow the instructions they are given by their superiors. A mortgage loan that is not being paid on time or at all WILL be sent into foreclosure by the lender. The question is not “If” but “When.”

How can I keep the bank from foreclosing? I just need a little more time!

The best move you can make if you’re in a similar situation is to take action before your home is foreclosed upon by your lender. You may qualify for a loan modification or refinancing. A New Jersey foreclosure and bankruptcy attorney should be the next person you call. Not many attorneys specialize in both areas, so it is important that you work to find a certified NJ attorney who has the experience you need.

Why do I need a bankruptcy attorney? I’m not broke and I want to keep my home.

An experienced NJ attorney who handles both foreclosure defense and bankruptcy matters will be able to stall your foreclosure by using the Automatic Stay. This tactic can only be utilized if the debtor files for bankruptcy.

Even if filing for bankruptcy was not on your top ten list of things to accomplish in life, it is a means to an end that has helped a multitude of people in your exact situation before.

 

Image: “Mother’s Moment” by Leonid Mamchenkov – licensed under CC 2.0

Can I Receive Hurricane Sandy Forbearance if I Filed for Bankruptcy?

Homeowners in New Jersey and all along the Atlantic coast will be hard-pressed to ever forget Hurricane Sandy – a deadly “superstorm” that hit the eastern seaboard in October of 2012. Assessed as the second-costliest hurricane to ever hit the United States, estimates of Sandy’s damage (in the US alone) are approximately $72 billion. The only hurricane in US history to cause more damage was Hurricane Katrina.

New York and New Jersey were the hardest hit states, with gale force winds that reached 90 mph and heavy rain (up to 12 inches in some locations) which led to flooding and significant structural damage of homes, businesses, beaches, boardwalks, roads, and more. Power outages were widespread and lasted for weeks in some places. For the first time since 1888, the New York Stock Exchange closed (on October 29 and 30) due to weather. Even Halloween was postponed in New Jersey, much to the chagrin of kids across the state.

As we hyper-focus on the damage done by Hurricane Sandy to New Jersey alone, we know that nearly 400,000 homes suffered damage from the storm, many were without power for an extended period of time, and 37 people died.

Relief efforts to clean up and rebuild the damaged areas of New Jersey were impressive, and some (but not enough) federal aid monies were approved for the state. Some of that federal aid was disbursed extremely slowly which means the aftermath of Hurricane Sandy is still felt today, nearly five years after the storm.

Residents along the New Jersey shore sustained the most damage – both from flooding and high winds – to their homes and properties. The fact that five years has passed should mean that everyone in NJ has recovered from the storm; unfortunately that just isn’t the case. Although many people and organizations dedicated extraordinary man hours and donations toward the recovery effort, there are homeowners who still remain displaced and/or are facing foreclosure.

The good news is that Governor Christie recently signed a bill (S-2300, A-333) that will potentially offer some much needed help to those who are still struggling post-Sandy. The bill specifically grants Sandy victims with a mortgage forbearance period of up to three years. In order to receive the forbearance, homeowners must have been approved for help via the Reconstruction, Rehabilitation, Elevation and Mitigation Program OR the Low-to-Moderate Income Program.

Affected NJ homeowners struggled for years trying to rebuild their homes after Sandy. Without enough funds to make their homes habitable again, a multitude of these residents had to rent alternative housing. Paying rent while still paying the mortgage on their now damaged property pushed many homeowners into bankruptcy.

Many homeowners filed for the protection offered by the Automatic Stay in the hopes that funding would be released before their bankruptcy case was finalized. Not realizing how long it would take for federal relief funds to be released, their bankruptcy cases ended long ago, and many of the homeowners chose not to reaffirm their mortgages.

Now that bill S-2300, A-333 has been signed, those who filed for bankruptcy and didn’t reaffirm their mortgages are wondering if they still qualify for forbearance. The good news is that a lender may not require that a mortgage be reaffirmed in order for the mortgage holder to receive forbearance.

Homeowners who’ve filed for bankruptcy without reaffirming their mortgages may have to provide their lender with a letter acknowledging that the mortgage debt was discharged in bankruptcy. This protects lenders/creditors from worrying that they’ll be sued when they try to collect on the debt again.

It’s very possible that lenders will not feel comfortable discussing the matter directly with the homeowner. They don’t want to seem as though they are breaking bankruptcy law by attempting to collect on a discharged debt. In this case, borrowers should work with a bankruptcy or foreclosure attorney in New Jersey to negotiate with their lender on their behalf.

 

Image: “Crooked House” by Don McCullough – licensed under CC by 2.0

Why Does Divorce Often Lead to Bankruptcy?

Money problems are frequently at least one of the factors that can lead a couple toward divorce. Often, spouses tend to blame one another for the financial struggles that have cropped up in their marriage. This can lead to a lot of fighting and distress that starts to form a wall between husband and wife. When the wall grows so high that it seems insurmountable, divorce can seem like the best (or only) resolution.

We’re not here to debate whether or not you and your spouse should or should not split up. That is totally your business, and we recognize that it is only our business to get your financial status back to where it used to be.

Regardless of the reason(s) for the demise of your marriage, the act of getting divorced itself often leads to bankruptcy of one or both spouses. If you’re counting on your divorce to wash all of your money troubles away, you’ve got a harsh reality to face. Some of the major reasons so many divorced couples end up bankrupt include:

Going from two incomes to one: Most couples who are married or committed long-term without being legally married tend to pool their incomes together in order to support their lifestyle. After a split, your spouse’s income vanishes, and you’re left to fend for yourself with only the money you make. Many times, this means attempting to continue making the same lifestyle choices with much less money. What happens is that the money runs out QUICKLY.

Legal fees: This is a factor in divorce that you actually have a lot of control over. Those couples who refuse to come together in order to create a settlement that works for both parties are only hurting themselves by racking up a ton of lawyer hours that simply aren’t necessary. As a matter of fact, you don’t even need TWO attorneys to get divorced! If you and your spouse can agree that you want to split amicably – using one attorney will save you thousands of dollars. The less in-fighting there is between the two of you, the lower your legal fees will be.

Alimony and/or child support: Naturally, you are legally required to pay both alimony and child support if you are so ordered by the court. We can only assume that you want to continue providing that financial support to your children. This means you may have to make sacrifices in some other areas of your life in order to cut down on spending. Those parents paying support who also have a plethora of other debts and high living expenses can get pushed over the edge into bankruptcy. IMPORTANT NOTE: Child support is NOT dischargeable in bankruptcy.

Bankruptcy of your (ex) spouse: As noted above, your ex cannot file for bankruptcy to get out of paying child support. This is not to say that they are prohibited from filing for bankruptcy; they just cannot discharge their child support obligation. If your ex-spouse files for bankruptcy, they may be granted a discharge (wipe out) of other debts, like credit cards, store cards, past due utility bills, late fees, and more. Since you were previously married, there’s a good chance that your name is included on some or many of the debts that are discharged, turning the creditors’ attention directly toward you.

Creditors don’t care about your private life. You got divorced, so sorry, too bad, is what they’ll say. “Your name is still on this account, and we don’t care if you’re single, married, or a neon green unicorn, we’d like our money please.” The bankruptcy of your former spouse can have a domino effect that ultimately causes you to file for bankruptcy as well.

If you’ve recently been through a divorce and are struggling with a similar situation, you have options. If you own your own home and don’t want to lose it, filing for bankruptcy is the perfect way to save it. Learn more at: http://www.veitengruberlaw.com/Bankruptcy-Law/.

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Veitengruber Law: Working with Elder Lawyers

 

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Elder law is the legal practice that focuses on representing senior citizens in regards to age-specific issues like: estate planning, Medicaid, disability, long-term care, administration of wills, guardianship, commitment, elder abuse protection, end-of-life planning, nursing home care and contracts, and many other issues that may arise in the aging population.

Essentially, elder law attorneys have a loaded job description: representing older Americans in just about any legal area you can think of. As you can imagine, it can be a bit overwhelming if a client (or couple) has a lot of needs at the same time.

Attorneys who get the best results for their clients are those who have a narrow area of focus. This allows them to become experts in their practice area(s) in order to both expedite the processes required by their clients and to get reliable, high quality results. Elder law attorneys who concentrate solely on elder law are consistently great at what they do.

Even so, the elder law attorney may still find himself overloaded with work from time to time, when, as mentioned above, a particular client requires a lot of attention. Additionally, any attorney can get overwhelmed if they have a sudden rush of new clients.

Elder law attorneys assist a specific type of client (the aging) in a variety of areas. This makes them the perfect partner for an attorney who specializes in specific areas rather than type of client.

Example: Elderly clients Fay and John come to your elder law practice wanting to set up their estate plans. They have a lot of assets (but not a lot of money), numerous beneficiaries and stipulations, and present a rather challenging and time consuming case. In addition to estate planning, Fay is also having issues with Medicaid that need attention, and John’s sister has just entered a nursing home wherein they suspect she is being neglected and/or abused.

On top of all of that, Fay and John stopped paying their mortgage six months ago and are about to lose their home to foreclosure. Although they knew foreclosure was inevitable, they’ve now realized that renting or buying another home will cost more than they were already paying their mortgage company each month. They want to know how they can save their home, which is scheduled for Sheriff’s Sale in two weeks.

The best option for their elder law attorney in this situation would be to connect them with a local foreclosure defense attorney who has significant experience in “last minute” foreclosure saves. By working together, both attorneys can provide everything Fay and John need so that they can continue living comfortably in retirement.

Other reasons to consider taking a “tag team” approach to an elder law practice include: clients who need to file for bankruptcy, real estate contract review, landlord/tenant disputes, credit repair, debt resolution and elder fraud.

Veitengruber Law is a full-service real estate and debt relief solutions law firm in New Jersey helping clients with foreclosure defense, bankruptcy, credit repair and other debt relief problems. We welcome any elder law attorneys who’d like to collaborate in order to give our joint clients the best results possible through retirement and beyond. We have offices in Monmouth, Burlington and Camden Counties and also serve Ocean, Mercer and Gloucester county clients.

Connect with us on LinkedIn, shoot us an email or give us a call. Monmouth, Ocean and Mercer Counties – (732) 852-7295; Camden, Burlington and Gloucester Counties – (609) 297-5226 or (856) 318-2759.

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Bankruptcy Law and Family Law: How They’re Connected

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Anyone who has been through a divorce knows that, second only to your love life, your finances are often the hardest hit area during a split. Many people continue to have financial difficulties long after their divorce is finalized, as well. Family lawyers who handle divorce cases know from experience that financial strife can be a huge contention between divorcing couples.

While your family law attorney will assist you in creating a Property Settlement Agreement that settles some of your money troubles (you may begin receiving child support or alimony payments after the divorce is finalized), oftentimes divorced couples will struggle with things like losing their family home to foreclosure, credit card debt, and potential bankruptcy.

As much as your divorce attorney may want to assist you with all of the above money matters, they have to focus their attention on everything within their own wheelhouse to ensure that you (and their other clients) achieve the desired outcome from your divorce. Their duties are many, and include drafting your PSA, attending court dates, negotiating and corresponding with counsel for your soon-to-be ex-spouse, handling domestic violence matters, and much more.

Frequently, family law attorneys find it very beneficial to work in tandem with an attorney who specializes in bankruptcy, real estate and/or debt relief. Because financial strain is a given in most divorces, it can be helpful for everyone involved to work as a team. Your divorce (family law) attorney will walk you through all of the steps of your divorce. With your permission, ideally he would then discuss your case with his tandem bankruptcy attorney, whom you would then work with to clean up your finances.

Of course, family law attorneys attend to matters other than divorce, like name changes, parenting time, grandparents’ rights, pre-nuptial agreements, child custody (unrelated to divorce), adoption, restraining orders, and domestic violence. Some of these matters can also be made easier by working with an attorney who specializes in finances. For example, the financial aspect of adoption matters can be quite intense. While your family law attorney will handle much of the adoption paperwork, he can refer you to a financial specialist like Veitengruber Law if you need more help organizing the necessary finances.

Every attorney has a lot on their plate every single day, regardless of their practice area(s). The best attorneys limit their focus to a limited number of practice areas so as not to get overwhelmed and spread too thin. If your family law attorney attempts to do it all himself, you may find that he’s too busy to set aside time to keep you updated on your case. On the other hand, a smart divorce lawyer will say, “Hey, while I’m working on negotiating your child visitation schedule, why don’t you go see George Veitengruber to start sorting out the fact that you can’t afford your mortgage payment?”

When attorneys work together, their clients always have a better result. Mutually beneficial relationships between experienced professionals give clients a well-rounded experience and optimal outcome. Veitengruber Law welcomes family lawyers in New Jersey (Monmouth, Ocean, Mercer, Burlington, Camden, and Gloucester Counties) to reach out to our firm if and when your clients need our services. We will gladly return the favor so that our mutual clients are well-cared for and happy with our services.

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Legal Help for NJ Veterans Facing Foreclosure

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As we honor those who served our country this Veteran’s Day, it’s important to know that there are thousands of homeless veterans in our country. Furthermore, there are over a million veterans who are in danger of facing foreclosure in the near future.

Why are so many veterans homeless?

This question is a good one, because many people in New Jersey and across the nation simply do not understand that so many veterans are struggling. The reason most homeless veterans lose their homes is due to a lack of affordable resources. Those veterans who are struggling financially need legal assistance to save their homes.

Sometimes, a veteran may face a seemingly smaller legal issue like the loss of a driver’s license. Studies show that veterans who lose their driver’s license end up with snowballing financial problems due to difficulty navigating the legal system in order to get their licenses restored. This leads to job loss due to the veteran not having a reliable way to get to work, which then in turn often leads to the loss of their home via foreclosure.

What assistance is available to struggling or homeless New Jersey veterans?

Across New Jersey, people are taking action to help homeless NJ vets. In South Jersey, a project entitled Operation Safehouse has volunteers building 60 cabin-like homes where veterans can live for up to two years while they are also given access to mental health assistance and work skill training so that they can eventually support themselves and move into their own permanent homes.

A similar program in Central Jersey, Community Hope, has been providing veterans with temporary housing for over a decade now, with an outreach program (Supportive Services for Veteran Families [SSVF]) in 15 NJ counties. Even though Community Hope helped over 750 veterans avoid homelessness last year and other programs like Operation Safehouse are popping up throughout the state, the number of  NJ veterans who are struggling continues to rise.

Veterans who fought the war on terror after 9/11 are feeling the effects of their time in combat and are dealing with severe PTSD that is preventing many of them from staying gainfully employed. Additionally, many post-9/11 vets living in New Jersey were so traumatized by their time on the front lines that they even struggle with keeping friendships and families together.

While the community organizations like Operation Safehouse and Community Hope are doing all that they can to support the emotional and physical needs of veterans, there is still a need for legal assistance that many NJ veterans simply can’t afford.

Are there any government programs or special considerations for veterans at risk?

If you are a veteran and you are at risk of losing your home to foreclosure, take the time to reach out to NJ foreclosure defense attorneys who are ready and willing to help you. Also, do your research on the special rules and exemptions you may qualify for as a US veteran.

You may be able to save your home from foreclosure if you’ve been able to maintain your employment but are still struggling with heavy debts that you simply can’t keep up with. In New Jersey, your VA benefits are exempt from the bankruptcy means test. This gives veterans a leg up when applying for bankruptcy in NJ.

In fact, in New Jersey, many disabled veterans are excused from even taking the means test. Filing for bankruptcy will push the pause button on your foreclosure, if you’re dealing with one, giving you time to formulate a plan that works for your current financial situation.

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My Personal Property was Sold Without a Writ of Possession!

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If your mortgage was in default and your home entered the NJ foreclosure system, the end result is sale of the property at what is commonly called a sheriff’s sale. At the end of the foreclosure process, if you have not retained a NJ foreclosure defense attorney to help you keep your home, a judge will order the local sheriff’s office to sell the property at a public sale. All proceeds from the sale will be paid directly to your lender to help them recover at least some of the money they lost when your loan defaulted.

Many foreclosure clients wonder what will happen to all of their personal property inside the home after the sheriff’s sale. Without knowing your rights, you may risk losing valuable and sentimental items. Even for homeowners who have accepted the foreclosure of their home, the loss of everything inside the home may indeed be heartbreaking at a time that is already wrought with tension.

The legal angle here is that no one – not your lender, the sheriff’s office or the new owners of your home – has the right to remove your personal property without first legally informing you of their intentions to do so.

Writ of Possession: Translated

After your property is sold at sheriff’s sale (also commonly referred to as foreclosure sale), the law requires that a legal document called a Writ of Possession be filed before you may officially be forced to vacate your home. The same must occur before anyone may remove any of your personal belongings from the property.

If you have experienced the loss of your home via foreclosure, and subsequently, sheriff’s sale, you need to be served with a copy of this Writ of Possession before anyone can “kick you out of” your home.

The Writ of Possession is essentially an order directly from the court to the sheriff’s office, granting them permission to officially evict you (and all of your belongings) within one day. If you have been served with a Writ of Possession (they are typically required to be posted on the front door of the property), please be aware that you have 24 hours to vacate and to take anything with you that you wish to keep.

Sometimes distressed New Jersey homeowners are not formally living in the home at the time of the Sheriff’s Sale, therefore they do not receive proper notice regarding the Writ of Possession. If this has happened to you, and your personal belongings were removed from your home without warning, you may have a valid cause of action.

It is important that you retain the services of an experienced New Jersey attorney who specializes in mortgages (real estate matters) and foreclosure defense. This type of attorney will be an expert at dealing with the NJ foreclosure system and all of its nuances, which will translate to the best results for you and your family.

If you are currently struggling to pay your mortgage and would like to avoid foreclosure at all costs, your foreclosure defense attorney will be able to counsel you on how to keep your home. To schedule a free consultation with Veitengruber Law to explore your options, click here!

 

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Can I File for Bankruptcy to Delay Foreclosure on My Home?

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Filing for bankruptcy isn’t only helpful for alleviating excessive debt, although we primarily associate the two together. Sometimes, filing for bankruptcy can be used as a strategy of sorts in order to allow you and your attorney enough time to formulate an effective foreclosure defense strategy so that you can keep your home.

Another good time to file for bankruptcy is if you’re attempting to sell your home as a foreclosure defense strategy, but the real estate process is dragging on interminably. Bankruptcy’s automatic stay* feature will stall a foreclosure long enough to allow your real estate transaction adequate time to proceed.

I didn’t know I could sell my house during foreclosure!

Oftentimes, we hear stories of homeowners devastated and displaced because of lenders foreclosing on them and then selling the property after evicting the (former) homeowners. The typical foreclosure story involves people who’ve fallen on hard times financially. Because of significant money struggles, homeowners being foreclosed upon typically don’t want to leave their homes because they do not have the means to acquire a new place to live.

Due to the overwhelming stress that most foreclosed homeowners are under, many of them simply don’t take the time to learn about all of their options. Some people wait out the foreclosure, staying in their home as long as possible without paying the mortgage, yet failing to put a plan of action into place for their future. While it’s true that burying one’s head in the sand is an ineffective solution, for some, denial isn’t just a river in Egypt.

At the end of the NJ foreclosure process your home will be sold at Sheriff’s Sale if you do nothing. Foreclosed homes typically sell for a lot less than is still owed on the homeowner’s mortgage. What this means for you as the homeowner is that your lender can seek a deficiency judgement that orders you to pay the difference between the Sheriff’s Sale price and the amount you still owe on the mortgage.

How can I avoid a deficiency judgement?

As soon as you start having money trouble that looks like it will likely end in foreclosure, list your home for sale! Yes, your home can be sold even if you aren’t making mortgage payments right now.

Selling your home before the bank has a chance to foreclose gives you a chance to achieve a higher sale price that will allow you to pay back any arrears and late fees, ensuring that your lender is paid in full. Doing so will cause a dismissal of the foreclosure and potentially put some of the equity (if you had any) into your bank account.

If your home has an offer from a seller when your lender is about to foreclose, filing for bankruptcy will activate that automatic stay* we mentioned earlier, giving you enough time to close the deal on your property before the bank has a chance to sell the home at a foreclosure sale for much less money.

Should I file for bankruptcy just to stall a foreclosure?

We don’t recommend that you file for bankruptcy if your only purpose is to delay a looming foreclosure sale, however most people facing foreclosure also have other debts that have gotten out of control.

If you have excessive medical debt, credit card debt, past-due personal loans and/or a second mortgage or home equity loan AND you’re looking a foreclosure square in the eye, filing for bankruptcy can help you hit the trifecta: discharge of your debts, foreclosure dismissal and successful sale of your home with potential equity in your pocket!

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Can a Dementia Patient be Served with Foreclosure Papers?

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New Jersey now has more residents than ever who are age 70 or older. This is in part due to the post-war baby boom that occurred after World War II soldiers returned home to their wives in 1945. Americans are also living longer due to technological and scientific advances in the medical field that have brought about cures and/or successful long-term treatments for many diseases that used to be fatal.

While an increased life expectancy is definitely something to cheer about, the fact that more New Jersey residents are living longer also comes with some challenges. Although people are living longer due to advances in medicine, the natural aging process can’t be avoided altogether.

For example, many older Americans are in good physical health but suffer from some form of memory loss – ranging from minor short term difficulties to dementia and Alzheimer’s Disease. Caring for a loved one with dementia obviously presents a number of hurdles, most importantly monitoring them for their own safety.

What, then, is to be done when a family member with dementia has made a mess out of their finances because of their inability to remember to pay their bills?

This question is now asked a lot among adult children who are now caring for a parent with dementia or Alzheimer’s Disease. It’s a good question, but one that you probably didn’t contemplate until said papers have already been served and you find yourself in the middle of a complex legal mess.

Example: An 80 year old man with dementia, who lost his wife four years ago, now resides in a nursing home. Upon his wife’s death, the man stopped making any payments on their mortgage due to his worsening symptoms of dementia and lack of income.

The man’s adult son has taken on the role of Power of Attorney, and is aware that no payments have been made on the home since his father moved into the nursing home. Assuming that any foreclosure paperwork would be sent to him as the POA, the son was simply waiting to receive notice of the foreclosure, which never came.

The adult son (POA) did not have the resources to save the family home and planned to let the house be sold at Sheriff’s Sale in the hopes that the situation would then be settled.

The man’s OTHER adult child, however, wasn’t privy to any of this information, as she lived across the country and could only visit on occasion due to her busy work schedule. As it turned out, she did have the means (and the desire) to save the family home.

Some family friends alerted the adult children to the fact that their father’s home was listed ‘For Sale’ in the local newspaper’s Sheriff’s Sale section. After doing some digging, they discovered that the lender had served their father with the foreclosure complaint.

Having no memory of this event, their father had no idea where the paperwork was or if he had signed anything.

Is it legal to serve a dementia patient with important legal papers?

As you can well imagine, it is both unethical and unlawful to do so. Rule 4:4-4.(3) regarding issuing a Complaint and Summons, reads as follows:

“Service of Summons, Writs and Complaints shall be made as follows…(3)Upon a mentally incapacitated person, by delivering a copy of the summons and complaint personally to the guardian of the person of the mentally incapacitated individual or to a competent adult member of the household with whom the mentally incapacitated person resides, or if the mentally incapacitated person resides in an institution, to the director or chief executive officer thereof.

Do you have an elderly family member who has been served unlawfully with a foreclosure complaint? You MUST work closely with a NJ foreclosure defense attorney if you want to save the home in question! You do have rights, and Veitengruber Law can save your family home, but you must act quickly. Call or click now: (732) 852-7295.

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Can My Homeowners’ Association Foreclose on My Home?

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You’d have to be living with your head in the sand not to know that failure to pay your mortgage will eventually result in foreclosure by your lender.

Banks and other mortgage lending firms generally only care about one thing when it comes to loans they’ve granted, and that is: getting their money back. When approving mortgage loans, lenders are extremely selective for a reason. They want to ensure that you will be able to handle the repayment schedule of your loan.

Failure to do so, even missing a single mortgage payment, sets off a red flag within most lending corporations. You will be contacted soon after a payment due date elapses. If you missed a payment due to forgetfulness, your lender will do everything they can to collect the payment (almost assuredly with a late fee attached) from you over the phone.

Further missed payments will force your lender’s hand into filing foreclosure against you, which can ultimately lead to the  repossession of your home. Although it may seem drastic, banks and lending companies depend on borrowers’ loan payments in order to stay in business.

As New Jersey foreclosure rates have soared over the past few years, most homeowners have become familiar with the concept of foreclosure for failure to pay their monthly mortgage bill. What many New Jerseyans don’t know is that their mortgage lender isn’t the only entity that can foreclose on their home.

Many New Jersey residents live in housing developments that are ‘governed’ by homeowners’ associations. These organizations, often referred to as HOAs, are in charge of making rules for the development and, in turn, enforcing those rules. Residents must pay monthly dues to their HOA, as they also oversee the care, upkeep and repair of common areas in the development.

HOA dues in New Jersey typically range from $200-$400 per month, but can be more or less depending on several factors, including: the average property value within the development and the existing amenities that require maintenance (tennis courts, swimming pools, parking garages, fitness centers, security systems and gates, landscaping and more).

When facing financial difficulties, many homeowners in New Jersey stop making their HOA payments and keep making their mortgage payments, thinking that this will keep them out of foreclosure. Unfortunately, that simply isn’t the case.

Falling behind on your homeowners’ association dues can result in your HOA putting a lien on your property. Failure to bring your past due HOA fees current gives your homeowners’ association the right to foreclose, even if you are current on your mortgage!

Just as lenders must file foreclosure via the NJ legal system, so must homeowners’ associations. This means that your HOA can file a foreclosure lawsuit against you in the same manner that your lender can if you stop making mortgage payments.

What happens to my mortgage in the case of a HOA foreclosure?

If your homeowners’ association successfully forecloses on your home, it can either continue making mortgage payments to your lender or not make any payments. Many HOAs will rent out the property (while making no mortgage payments) and wait for the lender, whose liens take precedence over the HOA’s liens, to file a second foreclosure.

Either way, the homeowners’ association will achieve its goal of reducing or resolving its financial loss caused by your failure to pay your HOA dues. Takeaway: your mortgage payment and your homeowners’ association dues are equally important, and failure to pay either can cause you to lose your home to foreclosure.

 

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