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Personal bankruptcy an option to stop New Jersey foreclosures

The foreclosure mill could be back in business in New Jersey after a state Supreme Court ruling on Feb. 27. The 5-0 decision clarified what is required to be included in a so-called "notice of intent" to initiate a foreclosure action.

The problem arose when the mortgage and housing crisis hit full stride after the onset of the recession in 2008. Mortgage lenders began listing solely the name of the servicer on notices of intent to foreclose. The new rules provide specific guidelines for complying with the state's Fair Foreclosure Act, and the glut of repossession actions that will likely follow may send some homeowners looking for personal bankruptcy protection.

The two-part court ruling declared that a notice of intent must include both the name and contact information of the mortgage holder as well as the servicer. But it also overruled a prior appeals court decision declaring that faulty notices of intent required dismissal of the legal action. Now, a trial court is left with the discretion to direct that an amended notice of intent be issued, dismiss the lawsuit altogether or take other action appropriate under the circumstances. Observers believe that, armed with the Supreme Court guidelines, lenders will now feel confident about proceeding with foreclosure notices. As a result, cases that have been dormant pending the court's action will likely now be processed through the court system.

What does it mean for New Jersey homeowners? It appears clear that foreclosure actions will increase. That increase may force homeowners to take stock of their financial situations and make hard decisions about how to stop foreclosure and solve their economic difficulties. For some of those affected, the best solution may be to seek personal bankruptcy protection. Such an action could offer an opportunity to reorganize debt while keeping one's home and also creating the opportunity for a new beginning.

Source: The Star-Ledger, "State Supreme Court decision could unlock foreclosure floodgates in New Jersey," Sarah Portlock, Feb. 28, 2012

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