Hello and thank you for allowing me the opportunity to assist you.
Question: “My question is that now that the bank is threatening forclosure (property worth 950K+, loan bal. is approx. 850K)within the next month or so, and that "...in the event the Property is sold at foreclosure and a deficiency remains...Lender may choose to file suit to collect the deficiency, cort costs, and attorneys' fees..." should I declare the corporation and/or myself bankrupt?”
Answer: I would wait until you are served with the lawsuit before filing. Based on the figures you provided there may not be a deficiency (though sales at auctions always bring less than market value). And even if there is a deficiency, it’s possible the lender will not bother suing if it believes that you have no realistic chance of repaying, and bankruptcy is apparent. It would ultimately be a waste of attorney’s fees.
Have I satisfactorily addressed your concerns? If not, then please feel free to ask for clarification.
DISCLAIMER: Please understand that the complexities of most legal problems cannot be adequately addressed in this setting, and that I am only licensed to practice law in the state of Maryland. Accordingly, you acknowledge (1) that we have not formed an attorney-client relationship, and (2) that my post is general information only and not specific legal advice.
Question: “One more question as follow-up to your response, if I wait until I get sued either personally and/or together with my corporation, it won't be too late to file bankruptcy at that point?”
Answer: No, it’s not too late. If you filed for bankruptcy protection right after being sued, but before completion of the trial, then the lawsuit would have to be dismissed and the debt would be discharged. If you filed for bankruptcy protection after the creditor obtains a judgment, then the judgment would be discharged. Generally speaking, it’s never too late to file for bankruptcy protection since a bankruptcy discharges all debt (with some exceptions), whether from a defaulted loan, judgment, etc.
Feel free to ask for further clarification if you'd like.
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