If you have no unsecured debt and own a home in foreclosure you may be wondering whether you should file a bankruptcy. Filing bankruptcy is a personal decision. If your only reoccurring monthly debt is your mortgage (which is in foreclosure) you may decide to file a bankruptcy so that you can zero out the mortgage debt on your credit report. Filing bankruptcy when you credit score has already taken a hit for something like a foreclosure can often result in an almost immediate increase in your credit score. In New Jersey, it is extremely unlikely that you will be sued for a monetary judgment by your mortgage company for a 1st mortgage on a primary residence. The standard practice is for the mortgage company to take back the property in a foreclosure but the mortgage balance remains on your credit report. FYI – A 2nd mortgage will almost always sue you for a money judgment after the 1st mortgage takes your property back through foreclosure.
Remember bankruptcy is a personal decision. No two bankruptcy cases are alike. Foreclosure is not the end of the world (even if it feels like it) and bankruptcy is not necessarily a bad thing (again even if it feels like it). Speak to an attorney to discuss the specifics of your case and explore your options.
