How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask socrateaser Your Own Question

socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 33369
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
Type Your Bankruptcy Law Question Here...
socrateaser is online now
A new question is answered every 9 seconds

New Jersey - Long story short. Closed business. 1M loan (commercial).

Resolved Question:

New Jersey - Long story short. Closed business. 1M loan (commercial). Paid 500K against loan with liquidation of business.. Still owe 500K. Bank got 500k judgment. Bank foreclosed on commercial property (value 250k. not sold by bank yet)Filed personal Bankruptcy. Bank has personal residence as security for loan (250k value). Bank filed adversary proceeding (bankruptcy court), trying to get 500K balance as judgment and the judge gave them a judgment for 50K that was used improperly. My home is free and clear and worth 250K. My question is, after foreclosure and sale of the home, how do the proceeds apply? (The 50K is part of the 500K owed, but I don't understand how either is addressed upon sale of the properties) If they sell the home for 250K & the commercial property for 250k, is everything clear? or if they sell the properties for $475K, the judgment still allows them to pursue me for 25K?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 1 year ago.
If the bankruptcy court gave a judgment for $50K, then that is the maximum amount that can be satisfied from the bankruptcy estate. If your home is worth $250K and the bank has a security interest/mortgage for $250K, then the bank can get $250K from the foreclosure, and the remaining $50K would have to be satisfied from your bankruptcy estate as unsecured debt -- which dependent upon the amount of assets which may be liquidated in bankruptcy may be $50K or $0. And, the bank must share the value of the liquidated assets with all of the other creditors. The bank cannot come after you for any postbankruptcy assets or income that you may later accrue.

Hope this helps.
Customer: replied 1 year ago.

Clarification. I thought the judgment (50K) from an adversary proceeding in bankruptcy court was enforceable after bankruptcy as a debt. ($0 assets left) this debt could be used to garnish wages etc...


 


But what your saying is, the judgment only applies to bankruptcy assets?

Expert:  socrateaser replied 1 year ago.
If I'm understanding your facts correctly, there is a secured lien for $250K, and a separate $50K judgment.

If the $50K judgment was given to the creditor by the bankruptcy court because you committed a fraud or defalcation/misappropriation of assets from your business, then that would be nondischargeable (Bankr. Code 523(a)), and the creditor could continue to pursue you after bankruptcy. Otherwise, the debt is dischargeable along with your other unsecured debts.

Assuming a nondischargeable debt, then if the sale of the personal residence and business property yields more than the value of the liens against those properties, then the additional proceeds could be seized by the sheriff to satisfy the bank's judgment. If the proceeds of sale is less than the amount of the liens, then you would remain liable for the $50K.

The key to interpreting your liability is determining whether or not the judgment was given based upon your fraud or misappropriation of assets. If yes, then you're still on the hook for the $50K. Otherwise, not.

Hope this helps.
Customer: replied 1 year ago.

Ok. That sound right. (the 50K is nonchargeable) This protects the bank if they get less then the liens on the property. But I'm a little confused on the fact that they could enforce the judgment beyond the value of the lien ('then the additional proceeds could be seized by the sheriff to satisfy the bank's judgment'), since the 50k is basically part of the 500k owed?

Expert:  socrateaser replied 1 year ago.
The bank has a consensual lien for $250K on a commercial property, and a consensual lien for $250K on a personal residence. You filed personal bankruptcy, which leaves the bank with those liens as its only recourse to recover for its $500K. If the properties sell for $475, then the bank is SOL for the $25K, because you were discharged from any personal liability for that $500K. If the properties sell for more than $500K, then the bank can seek to seize the additional proceeds to satisfy the judgment given by the bankruptcy court.

The bankruptcy court has awarded the bank with an additional judgment for $50K. This is a separate, unsecured judgment. It has nothing to do with the preexisting consensual liens. However, apparently the judgment is nondischargeable, per Bankr. Code 523(a)(2) or (a)(4).

Saying that the judgment is "basically" part of the $500K, doesn't make it legally so. Were the judgment to attach as part of the existing liens, the judgment would be moot, because the lien is only for $500K. So, unless the judgment expressly declares that the bank's lien is increased to $550K, then the judgment must be entirely separate, and my analysis in the first paragraph above must be the correct interpretation.

Hope this explains things better.
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 33369
Experience: Attorney and Real Estate Broker -- Retired (mostly)
socrateaser and 3 other Bankruptcy Law Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
 
 
 

Meet The Experts:

 
 
 
  • FiveStarLaw

    Attorney

    Satisfied Customers:

    3203
    Bankruptcy Lawyer. Experienced.
< Last | Next >
  • http://ww2.justanswer.com/uploads/FL/FLAandNYLawyer/2012-1-27_14349_3Fotolia25855429M.64x64.jpg FiveStarLaw's Avatar

    FiveStarLaw

    Attorney

    Satisfied Customers:

    3203
    Bankruptcy Lawyer. Experienced.
  • http://ww2.justanswer.com/uploads/TL/tleeders/2012-6-13_204815_TSL1.64x64.jpg Terry L.'s Avatar

    Terry L.

    Attorney

    Satisfied Customers:

    2204
    Better Business Bur 15yrs bankruptcy experience. Chicago Bar
  • http://ww2.justanswer.com/uploads/mnphillips2/2009-03-13_203105_10984459-249293407.jpeg Phillips Esq.'s Avatar

    Phillips Esq.

    Attorney-at-Law

    Satisfied Customers:

    950
    B.A.; M.B.A.; J.D.
  • http://ww2.justanswer.com/uploads/CO/cortrightlaw/2011-12-5_4117_Kevin.64x64.JPG cortrightlaw's Avatar

    cortrightlaw

    Attorney

    Satisfied Customers:

    490
    Attorney practicing Bankruptcy Law including Chapter 7, Chapter 11, Chapter 12, and Chapter 13.
  • http://ww2.justanswer.com/uploads/Jay1968/2006-12-03_004423_JoeRossPhoto.jpg JoeLawyer's Avatar

    JoeLawyer

    Attorney

    Satisfied Customers:

    376
    Attorney in the practice of Bankruptcy Law since 1996
  • http://ww2.justanswer.com/uploads/DY/Dylatess/2012-9-11_1968_BHBTemplePhoto.64x64.jpg dylatess's Avatar

    dylatess

    Attorney

    Satisfied Customers:

    370
    35 plus years of experience specializing in bankruptcy law
  • http://ww2.justanswer.com/uploads/US/USLawAnswers/2012-9-20_23143_20090105211638Headshot3b.64x64.jpg Brent Blanchard's Avatar

    Brent Blanchard

    Bankruptcy Attorney

    Satisfied Customers:

    315
    Twelve years experience in all aspects of debtor & creditor BK.