Many times I have clients that need to file bankruptcy, but are behind on their mortgage and cannot afford to get caught up, even through a chapter 13. The mortgage company is threatening to foreclose, and they ask me when they have to move out.
The answer I give them is, “When they are ready to throw you out!” In other words, after they bring the foreclosure, get a judgment, and hold a sheriff sale. At that point, you no longer own your home and have to leave.
What to Do While Waiting for Sheriff's Sale
This doesn’t mean, however, that you should wait until the last minute to move. I tell people that, once the foreclosure complaint is served on them, they should start packing. This can be done a little bit at a time, over a series of months, starting with the non-essentials.
Have a yard sale; throw out or recycle things; get rid of the junk that has accumulated. At the same time, put some money aside into savings to cover moving costs. In this way you will be ready when the time comes.
But What If the Bank Doesn't Foreclose?
But what if the mortgage company does not serve you with foreclosure papers? What if you are waiting years for this to happen? The answer is: hang tight, you might get a free house out of it!
How can this be? How can you keep your house without having to pay the mortgage? Simple! It’s called the Statute of Limitations, and in New Jersey it is 6 years. What has been happening lately is that mortgage companies have been waiting too long to foreclose and doing so after the 6 years have passed!
This Has Happened Before!
I had this happen to a client recently, although they had long ago moved out and gotten on with their lives. When the foreclosure was finally brought, they sent me a copy to review. It said that the mortgage went into default on November 1, 2008. The only problem was, suit was brought in 2015, after the statute had run on November 1 of 2014! They could have had a free home!
Now this does not mean that the debt has gone away. If you try to sell or refinance the home, the mortgage lien will still be there, and the balance will have to be paid. The bank just can’t forcibly collect and take your home; they have to wait for you to make a move.
So What Do You Do?
So what does this mean to you? It means that if you are in default on your mortgage, have been for some time, and have received a foreclosure complaint, you should consult with a lawyer to see if you have a statute of limitations defense. You might be able to live in your home for free until you decide to sell!
If you live in the southern New Jersey area, please feel free to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.