What Are My Options When My Home Is Scheduled For A Sheriff Sale 1. What is a sheriff sale? Once the lender has a judgment in its foreclosure case against you, it can then order your home to be sold at a sheriff s sale to the highest bidder. The proceeds of this sale are used to pay-off the lender and, if the bid price is high enough, all of the other liens on the property and, in the rare event any money is left over, that surplus cash is paid to you, the owner. The sale is conducted by the Sheriff s office in the county in which the home is located usually on the same day each week. Interested parties actually appear at the sale and place live bids. 2. How much notice will I get before sale? The Sheriff is required to provide notice by advertising the sale in the designated newspaper for four (4) consecutive weeks. Although the Sheriff is not required to do so, the Sheriff often posts a notice at the property 30 days prior to the sale and also provides written notice to the occupant of the home (whether the owner or a tenant) and the owner if not the occupant. You can call the Sheriff s office or go to the website for up-to-date information. 3. Who usually bids on my home? Depending on the home, bidders may include real estate investors who hope to purchase homes at low prices and always the lender who holds the first mortgage on the home. Sometimes, if the amount of the loan is higher than the value of the home, the lender may be the only bidder. 4. When do I have to move out of my house? Technically, you are required to leave your home once the sale is complete and the redemption period has lapsed (see below). But practically speaking, if the lender is the only bidder on the home and takes title at the Sheriff sale, it may not ask you to leave right away. On the other hand, if an investor buys the home, he or she usually wants to get into the home right away to fix it for resale. 5. What if I can t move right away? If you can t move right away because you have nowhere to go, the new owner has the right to ask the court to evict you. A hearing will be
conducted and you should appear at that hearing and tell the judge you don t have a place to go and provide an estimate of when you think you might be able to move. Often the judge will set a date for when you must leave and provide the owner with the right to ask the Sheriff to move your property out of the home on that date. 6. Keys for cash. Sometimes, particularly if you just don t have enough money to move and also to put up a security deposit on a new apartment, you can make a deal with the new owner where he or she pays you a small amount of money to assist with your move and at the same time save themselves the hassle, delay, and expense of evicting you. 7. Can I have the sale postponed? Yes, but only temporarily. You, as the property owner (the defendant in the foreclosure case), are entitled to ask the Sheriff for two (2) twoweek postponements (known as adjournments) for any reason. To postpone the sale, you must go to the office of the Sheriff and pay a small fee to request the adjournment. Often, the Sheriff will provide a simple form for your use. Sometimes the Sheriff s office will allow both of the two-week adjournments together or provide you with a form to fax to the Sheriff s office just prior to the new date without having to appear and pay an additional fee to obtain the second two-week adjournment. Once these free adjournments are used, there is not another opportunity to adjourn without reason even if the sale is rescheduled by the Plaintiff for a much later date. The Plaintiff in the case (the lender), however, can have the sale postponed as many times as it wants without reason. 8. What if I have a pending sale for the house? If you have a signed contract to sell your home to a qualified buyer but the closing date of the sale is scheduled after the Sheriff sale date AND the proceeds of the sale will be sufficient to pay-off all of the liens on the property and provide some cash to you, you may formally request the Court to adjourn the sale until the closing takes place. This is done by Motion to the Court and should be done far enough in advance to allow the plaintiff in the case to respond and a judge to review the case. Such a motion may be granted at the discretion of the judge upon a showing of good cause. This is only an option if you can show the judge you have the opportunity to actually receive some cash from the sale after paying all of the expenses of the sale and all of the liens and you would risk losing this cash if the home is sold at an auction. 9. What if I am working on a loan modification with my lender? The lender often follows a dual path: foreclosure and loan modification. If you believe you are close to working-out a loan modification, you should ask your lender to postpone the sale. Often the lender will. If for some reason the lender does not agree, you can ask the Court, by motion, to postpone the sale until the loan modification is complete. This is only an option if you can show the judge conclusively you are sure to receive the loan modification. If the lender tells the judge you are unlikely to obtain a loan modification, you will not receive an adjournment.
10. What if I have not been able to get a loan modification and I have used up my free adjournments: can I still save my home? You may still be able to save your home by using a Chapter 13 bankruptcy. Chapter 13 bankruptcy is a very powerful tool and has two key benefits. You can catch-up on your missed payments (cure the default) and start paying your regular mortgage payments right away. In a Chapter 13 bankruptcy, you submit a Chapter 13 Plan to the bankruptcy court where you propose to repay all of the missed payments (known as the arrears) over a period of sixty (60) months. This can be done if, after accounting for all of your other regular monthly expenses such as food, gas, utilities, clothing, car payments and other expenses, you still have enough money left over to pay your regular mortgage payment and the chapter 13 plan payment. 11. Can I still get a loan modification if I file a Chapter 13 Bankruptcy? Yes, another benefit of Chapter 13 bankruptcy is that often a loan modification can be obtained through the bankruptcy court s loss mitigation mediation program. This can be a very effective tool to get a loan modification when for some reason you were unable to do so outside of bankruptcy. 12. Can I get a principal reduction in bankruptcy? Forcing the lender to reduce the principal balance on your loan is known as a cram-down in bankruptcy. It is no longer available if the home is your primary residence but it may be if the home is an investment property. If you re an investor, this is something you should consider. 13. I have a second mortgage, what can be done about that? If you have a second or even a third mortgage loan and there is no equity in the home above the principal balance of the first mortgage loan, then the second and third mortgages can be stripped in a Chapter 13 bankruptcy. This means the lien is removed from the property and the debt is converted to unsecured and is paid, if at all, pennies on the dollar. 14. What if I have other debts such as credit cards or a high interest car loan? More than likely, in a Chapter 13 bankruptcy, your other debts can be significantly reduced or completely eliminated. This depends on your income and expenses. 15. What if I don t qualify for a Chapter 13 Bankruptcy? If you don t have enough income after all expenses to pay the necessary amount to cure arrears in the Chapter 13 plan and pay your regular monthly mortgage payment AND your income is less than median income for your family size, you may still benefit from a Chapter 7 bankruptcy. A Chapter 7 bankruptcy will delay the Sheriff sale for approximately three months and eliminate your obligation to pay all of your debts including any deficiency that may remain after the Sheriff sale takes place providing you with a fresh start and an opportunity to rebuild your credit. 16. What if I just want to stall the sale for as long as possible? In this situation, we may be able to use a combination of the free adjournments and bankruptcy.
The added benefit is that you may also have other debts that can be discharged at the same time providing you with a fresh start financially. 17. Will I owe any money if the home is sold for less than I owe? If the proceeds of the Sheriff sale are not sufficient to entirely pay-off the loan, the lender has 90 days to file for a deficiency judgment. If 90 days pass and the lender does not file for a deficiency judgment, then the option is no longer available. 18. Will all of the liens on the property be paid-off at the Sheriff sale? No, you will still be obligated to pay any judgments there may be against the property including the second mortgage or other judgments. If you have judgments from credit cars, car repossessions, or other debts, the lien is no longer valid against the property but it will continue to follow you until it is paid. Even a second mortgage holder can pursue you for the amount you owe after the Sheriff sale. Eliminating or reducing these other debts is one of the most powerful features of bankruptcy. 19. Can I keep my car even if I file bankruptcy? Yes, the debts on cars may be reaffirmed in your bankruptcy case so you can keep your car as long as you keep your payments up-to-date. 20. I ve heard bankruptcy stays on my record for 10 years: is that true? While bankruptcy stays on your credit record for 7 years, you can actively rebuild your credit and have a score in the mid seven hundred within two years. 21. Can I just do nothing and let the property be sold at the Sheriff sale? Yes, you can. But, you run the risk of being exposed to a deficiency judgment and all other outstanding debts you have and it will take longer to rebuild your credit after the foreclosure. This is the perfect time to use a bankruptcy to resolve not only the foreclosure but also all of your other outstanding debts and get the fresh start that bankruptcy offers consumers. 22. Can I pay the entire arrears just before the Sheriff sale to reinstate the loan? Yes, if at any time during the foreclosure process, you have the ability to pay all of the arrears, doing so will bring the loan current and allow you to keep the home and to start making payments. 23. Can I still pay-off the loan and save my home after the Sheriff sale? Yes, in New Jersey, there is a right of redemption that must be exercised within 10 days after the sale. If you have the ability to do a refinance, get a loan from a friend or family member, or a hard money lender, for enough money to pay-off the first mortgage loan, you can buy back the home within ten (10) days of the Sheriff sale.
24. What if there is money left over after all of the lien holders are paid? Known as surplus finds, if there is any money left over after all liens are paid, that money will be forwarded to you as the owner. 25. A special note for investors: If you own an income producing investment property, you may be able to cram-down the principal balance on the loan and pay-off the entire loan in sixty months. Your tenants will be notified by the Sheriff of the sale and sometimes when this happens, they stop paying rent. After the sale, it is the obligation of the new owner to evict any tenants. 26. How to stay apprised of the sale? Each county Sheriff office around the state maintains a website with contact information. I have found the people who work in the Sheriff offices across the state to be very helpful and cooperative. If you call, the people there will provide you with the latest information. Also, many of the websites for each Sheriff office link to the list of current sales although some do not update them as often as we would like. What to do next: If you want our help with stopping the sale and saving your home, we start with a free 30-minute phone consultation. Schedule your call one of two ways: Go to: www.talktotoddnow.com to schedule a free 30-minnute phone consultation. Or, call 908-867-0024 and ask our receptionist to schedule your free 30-minute consultation.