Can Bankruptcy Stop Foreclosure, Repossession, or Garnishment in New Jersey?

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When financial trouble hits, the stress can quickly become overwhelming – especially when you’re facing the loss of your home, car, or paycheck. The good news is that bankruptcy is one of the most powerful legal tools available for protecting New Jersey residents from aggressive creditor actions.

Whether you’re behind on your mortgage, worried about losing your vehicle, or dealing with wage garnishment, bankruptcy can immediately stop these threats and give you the breathing room you need to regain control.

In this guide, we’ll break down exactly how bankruptcy stops:

• Foreclosure
• Repossession
• Wage garnishment
• Lawsuits
• Bank levies
• Harassing creditor actions

…and how Chapter 7 and Chapter 13 offer different forms of protection depending on your situation.

The Secret Weapon: Bankruptcy’s Automatic Stay

The moment your bankruptcy case is filed – literally the moment – a federal court order called the automatic stay goes into effect.

This stay forces creditors to immediately stop:

• Foreclosure
• Sheriff sale
• Repossession
• Wage garnishment
• Bank account freezes
• Collection calls
• Lawsuits
• Letters & threats

The automatic stay is like a legal shield that surrounds you and your property from creditors.

It applies to:

• Chapter 7
• Chapter 13
• Chapter 11
• Subchapter V

And it is one of the most powerful debtor protections in the United States legal system.

How Bankruptcy Stops Foreclosure in New Jersey

Foreclosure is one of the most common reasons New Jersey residents file bankruptcy – and for good reason: bankruptcy provides immediate and effective protection.

How Chapter 13 Stops Foreclosure Permanently

If you’re behind on your mortgage and want to keep your home, Chapter 13 is the strongest option.

It allows you to:

• Stop foreclosure instantly
• Stop sheriff sale
• Avoid losing your home
• Catch up on missed payments over 3–5 years
• Keep your property even if you’re several months behind

This is called curing the arrears – paying back past-due amounts in a court-approved plan rather than all at once.

Even if your foreclosure sale is scheduled for tomorrow, a Chapter 13 filing can stop it.

How Chapter 7 Stops Foreclosure Temporarily

Chapter 7 provides temporary relief.

• It pauses foreclosure
• It buys a few extra months
• It stops harassment
• It gives you time to plan a solution

However, Chapter 7 does not give you a way to catch up on your mortgage. If you cannot bring the loan current, foreclosure may resume after the case ends.

Which Chapter Should You Choose?

How Bankruptcy Stops Repossession in New Jersey

Vehicle repossession can happen fast – sometimes overnight, without notice. Bankruptcy can protect your car before or after the repossession.

How Chapter 13 Protects Your Car

Chapter 13 can:

• Stop repossession
• Get your car back even if it was already repossessed (if done quickly)
• Allow you to catch up on missed payments
• Potentially reduce your loan balance (known as a “cramdown”)
• Reduce your interest rate This keeps you on the road and helps you maintain employment and stability.

How Chapter 7 Protects Your Car

Chapter 7:

• Stops repossession temporarily
• Helps eliminate unsecured car-related debts
• May allow you to reaffirm the loan and keep the car

If you’re current on your payments, Chapter 7 makes it easier to keep the car. If you’re behind, Chapter 13 is usually the better fit.

How Bankruptcy Stops Wage Garnishment in New Jersey

If your paycheck is already being garnished, bankruptcy can provide life-changing relief.

Immediate Protection Once you file:

• Garnishment stops immediately
• Your employer must legally stop withholding wages
• Creditors cannot continue collection

You May Recover Garnished Wages If the creditor garnished wages shortly before filing, you might be able to recover some of the money.

Chapter 7 vs. Chapter 13 for Garnishment

• Chapter 7: Eliminates the debt causing the garnishment
• Chapter 13: Stops garnishment and includes remaining debt in your repayment plan

Both chapters provide strong protection, but the right one depends on your financial goals.

What About Bank Account Freezes or Levies?

When creditors obtain a judgment in New Jersey, they may be able to freeze your bank account.

Bankruptcy stops:

• Bank freezes
• Bank levies
• Seizure of funds
• Removal of money from your account In many cases, you may recover funds that were frozen but not yet released to creditors.

Can Bankruptcy Stop Lawsuits?

Yes – bankruptcy immediately stops:

• Civil lawsuits
• Credit card lawsuits
• Medical debt lawsuits
• Collection lawsuits
• Eviction judgments
• Deficiency balance claims
• Wage garnishment judgments
• Bank levy judgments

Once you file bankruptcy, creditors must withdraw most types of legal actions.

How Bankruptcy Protects New Jersey Families and Homeowners

Many people believe bankruptcy means losing everything – but in reality, bankruptcy laws were created to protect what you have.

Bankruptcy helps you:

• Keep your home
• Keep your car
• Protect your paycheck
• Stop all creditor harassment
• Rebuild your life

Bankruptcy does not take away:

• Personal belongings
• Clothing, furniture, appliances
• Retirement accounts (100% protected)
• Most household items
• Most personal assets

New Jersey residents are often shocked to learn just how much bankruptcy can protect.

Examples of How Bankruptcy Stops Creditor Actions

1. Foreclosure Stopped Days Before Sheriff Sale A family 9 months behind on mortgage payments stopped the sheriff sale with Chapter 13 and saved their home.
2. Car Repossession Prevented Overnight A client who received a repossession warning filed Chapter 13 and protected their car immediately.
3. Garnishment Stopped and Wages Recovered A worker whose paycheck was garnished had the garnishment stopped within 24 hours – and recovered part of the withheld wages.
4. Small Business Threatened with Lawsuits Protected A Subchapter V filing stopped lawsuits and allowed a transportation company to reorganize $1M+ in debt.
5. Bank Account Freeze Lifted A client with a frozen bank account filed Chapter 7 and regained access to their funds.

Which Bankruptcy Chapter Provides the Most Protection?

How the Law Offices of Carlos D. Martinez Helps Protect You

We provide:

• Immediate bankruptcy filing when needed
• Emergency same-day petitions
• Foreclosure defense
• Repossession recovery support
• Garnishment relief
• Chapter 7 and Chapter 13 planning
• Small business bankruptcy support
• Bilingual services (English & Spanish)

You’ll work directly with an experienced, compassionate New Jersey bankruptcy attorney who explains your options clearly and makes sure you’re fully protected.

Bankruptcy Is a Powerful Tool to Protect What Matters

If you’re facing foreclosure, repossession, or wage garnishment, remember:

You are not helpless. You have legal rights – and bankruptcy can protect you. For many New Jersey residents, bankruptcy is the turning point that:

• Stops financial chaos
• Protects their home
• Saves their car
• Restores their income
• Eliminates overwhelming debt
• Creates a new beginning

You don’t have to face creditors alone. Help is available – and relief can begin today.