Are you behind in your mortgage?

The first thing to do is to call the mortgage lender or servicer and explain your circumstances. See if you can negotiate a way to get caught up. Be completely candid and explain your difficulties (if they are temporary such as illness or a short-term interruption in employment or job loss).

If you believe that you will not be able to make mortgage payments for 2 or 3 months be aware (at least in New Jersey) many mortgage lenders will refer the matter out to an attorney to start foreclosure after three months. You may be able to delay this by asking a mortgage modification or a forbearance agreement. This will require that you give the mortgage company financial information.

If you know you have equity in your home, you may want to consider selling your home. Here is how you can calculate the equity:

1. Determine what homes similar to your own might sell for.
2. Subtract an estimated 10% cost of sale (including the customary 6% real estate commission).
3. Subtract the amount that you owe on your mortgage.
4. Subtract the amount that you owe on any home equity line of credit that is secured on your home.
5. The remaining balance is the potential equity in your home. Will this be enough for you to start over in a rental or to allow you to purchase a smaller home that meets your needs?

Please consider whether a Chapter 13 bankruptcy proceeding might help you. Because bankruptcy laws are complex, you should consult with an experienced bankruptcy attorney. Chapter 13 was created in order to help homeowners save their homes from foreclosure and to become current on the mortgage. If you need time to get caught up with your mortgage, you may be able to protect your home in a Chapter 13 bankruptcy.

My office has been handling Chapter 13 cases for many years. I invite you to give me a call at (908) 782-9333.