Chris Layton

In a Chapter 7 or Chapter 13 bankruptcy, deficiency judgments can be eliminated.

I spoke with a client today who is considering filing bankruptcy in Charlotte. We discussed both her inability to balance her budget on a monthly basis, as well as additional creditors who have obtained judgments against her. One situation she is facing is leftover from a foreclosure—the bank sold the property and the sale did not satisfy their loan. As a result, the bank obtained a deficiency judgment against the client for the remainder they were owed. Great news– if she files bankruptcy, the bankruptcy will eliminate the personal liability for this debt.

Liens May Remain On 2nd Properties After Bankruptcy

If a client owns two pieces of property and one is foreclosed upon, it is important to file bankruptcy prior to the lender/creditor obtaining a deficiency judgment. The reason is that deficiency judgment related to the 1st property will ‘attach’ to the 2nd property owned by the client.

If the bankruptcy is filed before the deficiency judgment is entered, all liability for the debt is discharged. If the bankruptcy is filed after the judgment is entered, even though the personal liability for the debt is discharged, the lien may still exist as to the 2nd property. An attorney can help you wade through the law and your options.

When In Doubt, Make A Call

If you are getting notices about a lawsuit filed against you, or receive other communication about a lawsuit, don’t delay. By contacting a Charlotte bankruptcy attorney now, you can take action that will have very tangible effects on you and your family going forward. Information is free—call an attorney!

You can reach me HERE by email, or at 704.749.7747 at any time. I’m here to help.