Stop foreclosures and deficiency judgments in Florida

On behalf of Bankruptcy Law Firm of Clare Casas on Thursday, June 12, 2014.

Foreclosures in Florida are not uncommon. Ever since the start of the housing crisis in 2007, Florida has had one of the highest rates of foreclosure. To date, thousands of homeowners have tried to stop foreclosures and have performed short sales.

However, the woes of these unfortunate homeowners do not end here. Many former homeowners now face deficiency judgments. When a lender sues a borrower in order to get a deficiency judgment, the borrower is held liable for the difference between what is outstanding on the mortgage and what the lender receives for the house when it is sold. Deficiency judgments are not only relevant to foreclosures, but also when homeowners have sold their homes in a short sale.

When a lender wants to obtain a deficiency judgment, the courts require the lender to prove that the outstanding balance on a mortgage is higher than the property’s current value. An indebted homeowner also has the right to bring evidence to court in order to prove the value of the house is equal to the outstanding mortgage or even higher. Homeowners who can prove that, when the house was sold, it was valued higher than the balance of the loan are protected against a deficiency judgment.

Indebted homeowners in Florida facing foreclosures or deficiency judgments need to make sure they are aware of changes in state law. There are a variety of options available to consumers trying to stop foreclosures or deficiency judgments. An indebted homeowner may find it beneficial to consider the protection of bankruptcy. Chapter 7 bankruptcy discharges unsecured debts and offers protection against creditor harassment, while Chapter 13 bankruptcy offers a reorganized payment plan for those who have a steady monthly income. Opting for one of these possible solutions may provide consumers with a chance to make a fresh start.

Source: loansafe.org, "How to defend against a foreclosure deficiency judgement in Florida", Moe Bedard, June 4, 2014