If you’re behind on your mortgage payments on your home in New Jersey, you’re probably worried about foreclosure. When will the bank start the process of foreclosing on your home? Do you have any options to stop the foreclosure? Will you have to move out right away? New Jersey is a judicial foreclosure state, meaning that for most part, foreclosure processes go through the court system. The judicial process is slower than a non-judicial process and includes more protections for homeowners in default. Let’s look at a timeline of the New Jersey foreclosure process.

The First 60 Days

First, you have to miss one or more mortgage payments. The bank likely will not act until you have missed at least three payments, although this depends on the specific terms of your mortgage and the bank’s backlog of loans in default. So, from the first payment you miss, you probably have a little more than ninety days until the bank determines that you are in default on your mortgage.  The bank must then notify you by certified mail 30 days before it initiates any action against you. N.J.S.A. 2A:50-56. This notice will tell you what you can do to “cure” the default – usually you have to pay the bank everything you owe.

The Process Moves to the Court

Usually after 30 – 90 days, the bank will file a complaint with the court; you’ll receive a copy as well. You have 35 days to answer the complaint. You may choose not to answer or you may answer without contesting the complaint – that means you admit that you are in default and the bank is correct in its claim against you. Then, your case will move to the Office of Foreclosure for administrative processing. The General Equity judge in Mercer County will review your case to ensure that all the necessary paperwork and evidence is present and complete and, assuming you have no defenses to raise, will then enter judgment in favor of the bank. The judgment gives the bank the right to sell your house in a sheriff’s sale to raise the amount of money due on the mortgage loan.

It usually takes about a month for a case to go through this administrative process. If you answer and contest the complaint (argue that the bank is in the wrong and therefore not legally entitled to foreclose on your property) your case will move to the General Equity judge in the county in which your house is located. You’ll have an opportunity to explain your side of the story and present evidence in support and the bank will have an opportunity to explain its side of the story. This process usually takes a couple of months, depending on the court’s schedule. If the court finds against you, it will enter a judgment in favor of the bank, giving the bank the right to sell your house.

Sheriff’s Sale

When the bank intends to sell your house, it must advertise the sale weekly for four weeks in a local newspaper. That gives you a minimum of another month after the entry of judgment against you. If the bank has a large backlog of foreclosures (and many do, these days) and doesn’t schedule the sheriff’s sale right away, you may have even more time.

Due to Backlogs, Foreclosure in New Jersey May Take Much Longer

So, in theory, you have a minimum of four to six months from your first missed payment to a sheriff’s sale. In reality, you’ll probably have much more time. Foreclosures in New Jersey are still backlogged from the housing crisis. New Jersey has the second longest foreclosure timeline in the country, after New York. For the first quarter of 2013, the foreclosure process took an average of 1,033 days. That’s almost three years. The delays are caused by backlogs in the court system and in the banks due to the housing crisis. In some cases, the cost of foreclosure may be higher than the value of the house for the bank; banks may wait to foreclose on those homes until they appreciate in value.

You Can Stop Foreclosure

Until the entry of final judgment against you, you may “cure” your default by catching up on missed payments and late fees. Until the sheriff’s sale, you may “redeem” your property by paying off the loan, refinancing, or participating in a loan modification plan. Talk to your lender about your options for loan modification plans and payment options; they may be willing to work out an agreement that lets you stay in your home. If you’re facing losing your home, consider filing for bankruptcy. When you file for bankruptcy, you get the protection of the automatic stay. The automatic stay forces creditors to stop all collection actions, including foreclosures. Bankruptcy only works if all of a consumer’s debts are handled through the bankruptcy court, so the law cuts off all outside measures.

Bankruptcy cannot erase your mortgage loan, but it can give you the time you need to reorganize your finances and get back on track with your payments. It can, however, erase your unsecured debts and free up enough cash each month to make your mortgage payments much easier. Bankruptcy is a powerful tool to deal with serious debt and it will affect all of your finances, not just your mortgage loan. Before you make the decision to file, reach out to an experienced bankruptcy attorney for a free consultation to discuss your circumstances and goals.