Can my Landlord Evict me if I File for NJ Chapter 13 Bankruptcy?

Living paycheck-to-paycheck is the way of life for many Americans, and unfortunately, it doesn’t seem as though this has the potential to change any time soon. With the Mortgage Crisis of 2007 having lasting effects on the US real estate market, many former homeowners were forced to give up their underwater homes and downsize. Many of these people did not take on a new mortgage, but decided to become renters – at least until the real estate market righted itself.

The new renters brought on by the Mortgage Crisis (which had aftershock effects lasting well past 2010) plus those Americans who were already renting prior to 2007 combined to create a large population of US renters. While some renters have since been able to secure mortgages, a plethora of tenants feared losing yet another home to foreclosure and have continued to rent property in NJ.

The struggle of not knowing whether or not you’ll have enough money to cover your monthly living expenses is real. As of the end of 2016, nearly 11% of New Jersey residents were living at or below the poverty level, which is an excessively high number. For these New Jerseyans, figuring out how to stretch their low income to pay for food, housing and utilities is a daily burden that weighs on them constantly.

As a renter in New Jersey, filing for chapter 7 bankruptcy no longer prevents a landlord from initiating the eviction process. New legislature in 2005 protected homeowners but not tenants in chapter 7 cases. Those renters who need to file for bankruptcy to get out from under crushing debt cannot do so with a chapter 7 without risking eviction.

Although chapter 13 bankruptcy doesn’t completely wipe out debts like a chapter 7 discharge does, the good news for NJ renters is that it offers protection from eviction. All back rent that you owe your landlord can be included with your other debts when you file. A chapter 13 bankruptcy can save you from eviction by creating a payment plan wherein you will repay your landlord the arrears you owe over a set period of time that is considered reasonable.

As long as you continue to make all of your chapter 13 repayments (made through your bankruptcy trustee who then pays your creditors/landlord) along with your current rent payments, you cannot be evicted due to being behind on your rent. Your chapter 13 repayment plan will be structured in such a way that you can afford in comparison with your unsustainable living expense schedule prior to filing for bankruptcy.

It’s important to note that in order for you to avoid eviction via chapter 13 bankruptcy, you must be able to prove that you have enough income to afford your repayment plan with enough money left over every month to be able to make your current rent payments on time and in full. In addition, any landlord may evict a tenant who has endangered the property in question through illegal activities such as drug use, drug distribution or breaking the lease agreement in other dangerous ways, even if they have filed for a NJ chapter 13 bankruptcy.

 

Image: “Evicted” by Gideon – licensed under CC 2.0

Can the Bank Repossess My NJ Foreclosed Home Before Evicting Me?

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If your home has been through the NJ foreclosure process and the new owner has tried to take possession of the property before you have received formal eviction notice, it is important for you to know your rights.

Naturally, if you’ve made it all the way to the end of the foreclosure process in New Jersey, the fact that you’ll have to move soon should come as no surprise. With that being said, as the former owner of the home, it is within your rights to stay in the home until you have received proper notice of eviction.

After the Sheriff’s Sale of your home has occurred, the NJ County Sheriff must provide the bank/lender with the property deed within ten days. If the bank or lender was not the winning bidder at Sheriff’s Sale, the successful party who purchased the home will be the deed recipient. It is most often the mortgage company who ends up with the home since they are the ones who initiated the foreclosure process in the first place. Their reason for filing for foreclosure is so they can re-sell the home to recover part or all of mortgage loan that you (as the borrower) have failed to pay. Missed mortgage payments are what lead to foreclosure.

Upon receipt of the deed to the property, the mortgage company’s next step is to file a formal eviction motion in New Jersey State court. Without this official eviction (called a Writ of Possession in legal terms), you cannot be forced to leave the home even after it has been sold at foreclosure sale.

Is your mortgage company attempting to force you out of the home without a formal eviction? If you have yet to see an actual eviction notice affixed to your front door, you have almost certainly not been served with notice to vacate the premises. Any efforts on the part of the lender to forcibly kick you out without eviction paperwork is against the law in New Jersey.

We typically advise our foreclosure clients to be prepared with an alternate place to live as of the date of the Sheriff’s Sale. Forcing your mortgage company to evict you can look bad to your future landlords or lenders – potentially marking you as a “difficult” borrower or renter. However, it is within your rights to remain in the home until you have formally been evicted, and staying there can give you several months to save money because you won’t be paying a mortgage or rent payment. Weigh your options carefully before you decide whether to vacate willingly or stay put until the Sheriff removes you.

The bottom line is that, legally, your mortgage company (or new owners after Sheriff’s Sale) cannot take possession of the home until you have been formally served with an eviction notice. If your foreclosed home’s new owners are attempting to prematurely take possession of the property by locking you out, removing your personal items, or moving new tenants in while you aren’t home – you need to contact your New Jersey foreclosure attorney right away in order to preserve your rights.

Image credit: Andy Wright

Can My Mortgage Company Lock Me Out of My House?

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Recently, we’ve heard several stories of people being locked out of their homes by their mortgage servicer. Under normal circumstances, a mortgage lender does not have the right to prevent you from entering and living in your home – even if you are in the middle of a foreclosure. There are some mortgage companies who have found a way to side-step the rules, however.

If you have missed a few payments on your home mortgage loan but have not received notice of your lender’s intent to foreclose, you may be on the slippery slope, heading toward a foreclosure.

On the other hand, if your lender has already filed a Notice to Foreclose with the courts, you will soon be served with that notice. After you receive your lender or bank’s Notice to Foreclose, you’ll have to make a decision. Do you want to continue (are you able to afford) living in the home?

If you can afford the cost of your mortgage payment or would be able to afford it if you had it modified slightly to meet your income, your best next move is to contact your mortgage servicer in order to apply for a mortgage modification.

In the instance that you are not able to afford the mortgage payments, even with some modifications being made, your home will go into foreclosure in the next several weeks or months. It is important for you to know that you are allowed to continue living in the home throughout the entire foreclosure process.

Unfortunately, what has been happening in some foreclosure cases is that the mortgage company sends a representative to examine the home or property to determine if it is occupied or vacant. This is within their rights. However, upon a cursory glance at a property, many mortgage company reps deem homes as “vacant” when they are, in fact, occupied.

This can happen when you and your other family members are at work, school or otherwise engaged in activities outside of the home. Once the mortgage representative deems a home vacant, it is legal for the company to change the locks and to remove any personal items that they will say were “left behind.”

The result of this action is obviously devastating to home owners who were simply out of the house only to come home and discover that not only are they locked out, but all of their personal property has been taken.

Why are mortgage companies locking people out of their homes?

Homeowners who are behind on their mortgage payments are legally allowed to live in their home until the foreclosure process is completed. Mortgage companies cannot legally remove the homeowner until the end of the foreclosure case.

However, if the homeowner voluntarily relocates and leaves the home empty, the mortgage servicer can take control over the home. Unfortunately, some mortgage companies are attempting to falsely label properties as “vacant” when they are clearly still being lived-in.

In order to avoid this situation – if you’re behind on your mortgage, call your mortgage lender and write them a letter, stating that you intend to continue living in the home until the end of the foreclosure case. This will leave a paper trail of your intentions, should anything untoward happen in the future.

If you’ve found yourself locked out of your home currently and don’t know where to turn, call us today. We can (and want to) help!

Image credit: Luke Jones