The foreclosure process can be complicated and seeking legal representation is always recommended. Sometimes borrowers ignore the foreclosure timeline until their property is sold at a sheriff sale. The borrower, however, should have been properly served with the notice of sale. The sale is the last step in the foreclosure process and effectively divests the ownership interest into the sale purchaser. What happens if the borrower seeks to save their property after the sale? This is a possibility, but places a large burden on the homeowner.
Redemption: All About Timing
New Jersey rules permit a 10-day period for “redeeming” the property. See, R. 4:65-5. Redemption requires the borrower to pay the full amount of the foreclosure judgment, plus interest, costs, and reasonable expenses that the purchaser expended. N.J.S.A. §2A:50-4. This means that the borrower has to pay the mortgage company the whole amount of the mortgage balance, not just the past-due amount/arrears. This “right to redeem” is based on equity to protect the borrower from the forfeiture of title. See, Hardyston Nat. Bank of Hamburg, N.J. v. Tartamella, 56 N.J. 508, 513 (1970). If the borrower can pay off the mortgage judgment (plus other fees and costs previously stated), within the 10-day period after the sale occurs, they can keep the property. Once the 10-day period passes, the court can confirm the sale, which would finalize the same, and retaining the property would then become almost impossible.
There are instances where the borrower is sued for a deficiency judgment, which is a personal judgement obtained for the difference between the amount of mortgage debt at sale (the final judgment amount) and the foreclosure sale price (or fair market value of the property at the time of the sale). If the lender obtains a deficiency judgment, and the borrower still wants to redeem the property, they can redeem within six months after the judgment is entered. N.J.S.A. §2A:50-4.
Bankruptcy: Extension of Redemption
The borrower can extend the 10-day redemption period permitted by state law by filing a bankruptcy case. By operation of 11 U.S.C. §108(b), the state law redemption period is extended an additional sixty (60) days from the date of the filing of a bankruptcy petition. See, In re Hric, 208 B.R. 21, 25 (Bankr. D.N.J. 1997), see also In re Little, 201 B.R. 98, 105 (Bankr. D.N.J. 1996). If the bankruptcy case is not filed within the 10-day redemption period, then the state court could confirm the sale. If the bankruptcy case is filed within the 10-day redemption period, the right of redemption is extended for an additional 60 days at which time the borrower (now also the debtor) must pay off the mortgage judgment (plus other fees and costs discussed above).
If your property has been sold at a sheriff sale we may be able to help, but time is of the essence. If you are unsure of your legal rights, please give us a call for a free consultation. We have office locations in Wayne, Hoboken, Newark, and Hackensack.
Whether you need to completely eliminate your debt through Chapter 7 bankruptcy, or need to reorganize your credit payments through Chapter 13 or Chapter 11, we are well qualified as a full-service bankruptcy law firm for people in these and other New Jersey counties: Passaic County, Hudson County, Essex County, Bergen County, Morris County, and Sussex County. Call us today at 973-870-0434 or toll free 888-412-5091.