Deficiency Balances after Repossession and Foreclosure
A debtor may have their property repossessed or foreclosed on by a creditor if they are unable to keep up with their expected payments. As a result, the property will be sold by the creditor, putting the amount of that sale against the value of the debt. If the debt isn’t covered fully by the value of this sale, though, the debtor may be responsible for the remainder of the debt. This remainder is known as a deficiency balance.
If you’re facing the repossession or foreclosure of your property, you may want to consider bankruptcy as a way to prevent this from happening. For more information about how bankruptcy may be able to help you protect your property from seizure by a creditor, contact Florida bankruptcy attorney Ryan J. Really, Attorney at Law, PLLC, by calling (239) 237-0675.
How Deficiency Balances Work
Considering that deficiency balances can hurt a debtor’s financial situation even further, it’s important for them to know what rules a creditor must abide by. These rules include the following:
- The sale of the property needs to meet reasonable commercial standards
- A debtor should be notified of potential liability for a deficiency balance before the sale
- If a creditor makes an error during the repossession or foreclosure, they may not be allowed to pursue a deficiency balance
- Some deficiency balances aren’t legal
If a debtor takes action to sell a piece of property before it’s seized, they may put the value of that sale towards their loan. This may reduce what is owed on the loan, more so than if the creditor sold the asset.
The loss of property through repossession or foreclosure can be difficult to deal with financially and emotionally. However, bankruptcy may be able to help you stop this from occurring. For a free consultation regarding your options in moving forward with a bankruptcy case, contact Florida bankruptcy lawyer Ryan J. Really, Attorney at Law, PLLC, at (239) 237-0675 today.