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VanDLaw
VanDLaw, Attorney
Category: Bankruptcy Law
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Experience:  Chapter 7 & 13
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We are in the middle of giving our house back to the bank ...

Customer Question

We are in the middle of giving our house back to the bank and they were not intetested in a dee in lieu of foreclosure so they are going the foreclosure route. My question is this, we have no equity in our house nor do we have any assets at all, we are worried that either the first or second mortgage company will come after us for the deficiency. We filled chapter 7 about 6 and a half years ago if we needed to do it again to try and fight off the deficiency how hard would that be for us. My wife is the only one working now and she is in the Navy and does not make much. We are in southern California.
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  VanDLaw replied 6 years ago.

HelloCustomer

The mortgage companies seem to be more aggressive these days in regards XXXXX XXXXX judgments, so it is a valid concern should they foreclose on your house.

You would be able to declare Chapter 7 again in 8 years, and you are eligible to file a Chapter 13 in 4 years, so you are eligible for a Chapter 13 right now. You must have steady income to be able to repay the confirmed plan in a Chapter 13. Chapter 13's are commonly used to stop foreclosures, and let debtors get caught up on mortgage payments over a period of time (3-5 years). All your debt is included in the plan, and is paid pennies on the dollar.

It may be worth your time to consult with a bankruptcy attorney to go over that option, and you may not have a foreclosure at all.

The other thing to consider is if they do get a deficiency judgment it will be wiped out once you can file for Chapter 7 again, and you are not that far away. The judgment process does not move quickly.

Customer: replied 6 years ago.
Ok i think i understand. However we have already moved out of the house so they are going to take it back. We would have no money to do a chapter 13 if they get a deficiency, but my understanding is in CA that if the bank sells the house at auction which is what it seems like they are doing since we expect a notice of sale in the next couple weeks they can't come after us for it but i might be wrong on that too. My understanding would then be only the second could try and from what your saying that could take enough time that we would be able to file chapter 7 again. Am i understanding you right?
Expert:  VanDLaw replied 6 years ago.

Even if you have moved out of the house, you can still stop the foreclosure in a Chapter 13. The deficiency judgment has nothing to do with the Chapter 13 repayment because there would be no deficiency judgment, no foreclosure , and the house would not be sold. You would have to file the bankruptcy before the sale of the house, after that it is too late and the house would be gone.

I do believe the first mortgage can get a deficiency judgment in California, but do not know 100%, the second for sure. And yes, I think you could drag it out enough that even if they get the judgment, before they could execute on it (garnish banks wages, etc.) you could file Chapter 7 again.

 

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