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New Jersey homeowners may still be on the hook for debt

New Jersey residents may need to be aware of yet another consequence of the proliferation of foreclosures that have been processed since the housing bubble burst. There are many homeowners in New Jersey that believe their foreclosures are complete and they are no longer responsible for any debt associated with their prior home. Unfortunately, some lenders failed to complete the foreclosure process in a manner that causes the homeowner to remain liable for the property.

This liability could come in the form of property taxes, home owners' association dues or even a portion of the mortgage. Some people have discovered that the auction on their home never took place, leaving the home is still in the name of the homeowner. These homeowners receive various bills for the property despite the fact that their lender was supposed to take title at some point in the past, yet for some reason failed to do so.

Other people have found that their second mortgage lender did not forgive the debt despite the fact that the first mortgage lender had completed a foreclosure on the home. There are other people whose primary mortgage lender never completed the paperwork to forgive the balance between the amount due on the mortgage and what the home sold for at auction. It is only when a collection agency begins to call that the homeowner may become aware that there is a problem.

For some people, these errors can be fixed; however, the damage to their credit is already done. Then there are people that find that their already dire financial situation just got worse. For some New Jersey homeowners that find themselves in this situation, bankruptcy may be the best way to deal with the situation. Filing for bankruptcy protection could help wipe away the debt that was caused by their lender not properly handling the foreclosure of the home or by other unforeseen problems in the foreclosure process.

Source: CNN, "Zombie foreclosures: Borrowers hit with debts that won't die," Les Christie, Feb. 20, 2013

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