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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
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Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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I used to live in the stateof Alabama and I lost my home due

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I used to live in the stateof Alabama and I lost my home due to forclosure. I also had a second mortgage. I moved to another state (Ohio). I have been paying into Chapter 13 for some unsecured creditors for the past 4 years. I just recently found out that the second mortgage company has filed a deficiency judgement in Alabama. What are my rights since I am in a different state where the home forclosed?
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 4 years ago.
If your Chapter 13 plan provides for the second loan (even if it merely mentions the loan), then the lender is in contempt of the automatic bankruptcy stay, and it's likely that no deficiency judgment can be enforced against you. Otherwise, the deficiency may be enforced, unless you successfully move the bankruptcy court to add the loan to the current Chapter 13 plan.

The fact that you no longer live in Alabama does not, by itself, limit the lender's right to obtain or enforce a deficiency judgment against you.

Hope this helps.

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Customer: replied 4 years ago.
I do not understand what is meant by contempt of the automatic bankruptcy stay. How can a deficienct judment be enforced if I am not in the state where it was filed.
Expert:  socrateaser replied 4 years ago.
When a Chapter 13 plan is in force (from the date of filing of the petition of bankruptcy, until the case is closed), there is a stay on all creditor actions to try to collect a debt. A violation of the stay gives the debtor (you) a legal action against the creditor in bankruptcy court for violation of the bankruptcy stay. In other words, you can sue the creditor for trying to get a deficiency judgment and receive damages for the violation.

Re how a deficiency judgment could be enforced against you, it's pretty simple: The creditor takes the judgment and "registers" it in your new state, and then it can collect against you, exactly the same as if you were living in Alabama.

However, if the creditor is in violation of the bankruptcy stay, then you can stop the creditor dead in its tracks.

For a bankruptcy attorney referral in your jurisdiction, see this link.

Hope this helps.

NOTICE: My goal here is to educate the public about the law. Please help me in this effort by clicking Accept (or, click on one of the happy smiley faces/stars/etc., if applicable) for my Answer to your Question. If you have a subscription account, clicking Accept does not create any additional charge. It merely gets me credit for my Answer.

And, if you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Thanks!

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