Are you having trouble paying your mortgage payments? Have you decided to surrender your home to the mortgage company through foreclosure? If so, you could be liable for thousands of dollars if the mortgage company pursues a deficiency judgment. Before you allow your home to go back to the bank through foreclosure, you need to take advantage of our free bankruptcy consultation to discuss how you can resolve your debt problem and avoid a deficiency judgment.
What is a Deficiency Judgment?
When your home is sold at a foreclosure sale, the proceeds from the sale will be paid to the mortgage company to satisfy the debt you owe on your home. A deficiency occurs when the sales price received at the foreclosure sale is not sufficient to pay the entire debt owed in full. The mortgage company has the right to request a deficiency judgment against you for the difference.
For example, if you owe the mortgage company $100,000 but your home is sold at the foreclosure sale for $80,000, the mortgage company is still owed $20,000. The mortgage company can seek a deficiency judgment against you for the $20,000 deficiency. This deficiency judgment will accrue interest until it is paid in full; therefore, the amount will increase each day.
Your mortgage company can seek to enforce the deficiency judgment to collect the amount you owe; however, filing bankruptcy can avoid or resolve the problem of a deficiency judgment.
How Can a Bankruptcy Avoid a Deficiency Judgment?
If you file your bankruptcy case prior to the foreclosure sale, the mortgage company is barred from seeking a deficiency judgment regardless of how much is owed on the debt after it receives the proceeds from the sale. However, even if you already have a deficiency judgment against you, filing a bankruptcy can discharge the debt that you owe under the deficiency judgment. Your bankruptcy discharge prevents the mortgage company from collecting on the deficiency judgment; therefore, you will not need to worry about further legal action to collect the debt.
Bankruptcy can help you keep your home if you are behind on your mortgage payments. Filing a Chapter 13 bankruptcy stops foreclosure and allows you to catch up your past due mortgage payments over time. You must file the Chapter 13 case before your home is sold at a foreclosure sale to save your home. Once your home is sold, filing bankruptcy will not “undo” the sale.
Contact an Experienced Kentucky Bankruptcy Attorney
We’ve Helped Thousands of KY Families, we can help you!
The bankruptcy lawyers of Musselwhite Meinhart & Staples, PSC help individuals who struggling with debts find affordable solutions to their financial problems. Our attorneys have over 50 years of combined legal experience. You can trust that you are receiving effective, efficient, and compassionate legal representation when you need it the most.
Our law firm represents clients throughout central Kentucky. Contact us at (270) 351-6032 or toll-free at 1-800-754-HELP to schedule a free bankruptcy consultation. You may also contact our office through our convenient online contact form.
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