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Ely
Ely, Counselor at Law
Category: Legal
Satisfied Customers: 86657
Experience:  Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
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Long story short. Closed business. 1M loan (commercial). Paid

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Long story short. Closed business. 1M loan (commercial). Paid 500K against. Still owe 500K. Filed personal Bankruptcy. Bank has personal residence as security for loan. Bank filed adversary proceeding, 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 500K. 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 property) If they sell the home for 500K, is everything clear? or if they sell the property for $475K, the judgment still allows them to pursue me for 25K?
Submitted: 1 year ago.
Category: Legal
Expert:  Ely replied 1 year ago.
Hello friend. My name is XXXXX XXXXX welcome to JustAnswer. Please note: (1) this is general information only, not legal advice, and, (2) there may be a slight delay between your follow ups and my replies.

I am sorry for your situation. Can you please tell me which court gave them a judgment for $50k - the bankruptcy court, or, civil court?

This is not an answer, but an Information Request. I need this information to answer your question. Please reply, so I can answer your question. Thank you in advance.
Customer: replied 1 year ago.

Sorry, Bankruptcy. So it is enforceable.

Expert:  Ely replied 1 year ago.
My friend,

Sorry, Bankruptcy. So it is enforceable.

No need to apologize and thank you for your clarification.

What happened was that you no doubt added them as a creditor in your personal bankruptcy. What a bankruptcy does is reduce/eliminate the debt. So instead of getting a $500k judgment, they received a $50k judgment, and the matter was considered closed.

This means that they do have a judgment for $50k, and they can enforce this, but only this. The other $450k debt is voided.

If they sell the home for 500K, is everything clear? or if they sell the property for $475K, the judgment still allows them to pursue me for 25K?

If they force a sale of your home, the most they can get is $50k (plus legal fees, if this is added to judgment). Anything over that amount in the sale is returned to you.

So if your home is sold as part of judgment for, say, $420, then they keep $50k, but you get $370k back.

Many states have homestead laws that prevent the sale of homes for judgment to begin with. Let me know what state you are in if you wish to hear more about this.

Gentle Reminder: Please use the REPLY button to keep chatting, or RATE my answer when we are finished. Kindly rate my answer as one of the top three faces and then submit, as this is how I get credit for my time with you. Rating my answer the bottom two faces does not give me credit and reflects poorly on me, even if my answer is correct. I work very hard to formulate an informative and honest answer for you; please reciprocate my good faith. (You may always ask follow ups at no charge after rating.)
Customer: replied 1 year ago.

Additional clarification. The bank was granted permission by the court to continue foreclosure, since the personal residence was used to secure the loan. (they have not proceeded any further, but have the ability to continue foreclosure). My understanding is that bankruptcy does not discharge my debt in regards XXXXX XXXXX secured property, such as my home. ( I am under the understanding they will get all the proceeds to satisfy as much of the loan as possible.) The judgment in bankruptcy would seem a waste unless they needed it to continue foreclosure or could enforce it in a shortage of the debt owed.?.?

Expert:  Ely replied 1 year ago.
Hello friend,

Thank you for this additional information.

Additional clarification. The bank was granted permission by the court to continue foreclosure, since the personal residence was used to secure the loan. (they have not proceeded any further, but have the ability to continue foreclosure).

Okay - so far the answer stays as is.

My understanding is that bankruptcy does not discharge my debt in regards XXXXX XXXXX secured property, such as my home. ( I am under the understanding they will get all the proceeds to satisfy as much of the loan as possible.) The judgment in bankruptcy would seem a waste unless they needed it to continue foreclosure or could enforce it in a shortage of the debt owed.?.?

Not quite. Understand that the bankruptcy has "minimized" the debt to $50k. This is all that is owed now, from the original $500k. That is the whole point of bankruptcy - to minimize/void debts.

If they end up forcing a judicial foreclosure to satisfy judgment, then they can collect on whatever money the judgment states that they are owed, which is $50k. Anything more is given back to you. How would it be fair if they foreclose on a property for $420k, and then keep not only $50k, but also the rest as well?

Forget the $500k - the bankruptcy court eliminated it - all that survives is the $50k judgment, and this is all that they can enforce.

I hope this helps and clarifies. Good luck.

Gentle Reminder: Please use the REPLY button to keep chatting, or RATE and submit your rating when we are finished.
Customer: replied 1 year ago.

OK. Sounds great. But it was clearly explained to my by the Bankruptcy attorney there was nothing I could do to stop them from taking the house (this was before the judgment). The only other information I can give you is the bank is listed on the deed as a mortgage, even thou no 'mortgage' is recorded since it was a commercial loan.


 


Just really need to be clear. Prior attorney deferred to answer because they were unsure how the judgment would be enforced in combination with the foreclosure (that always makes you feel like you made a good choice)

Expert:  Ely replied 1 year ago.
Friend,

Tell me, please:

1) What state are you in; and
2) How long have you lived in the home?
Customer: replied 1 year ago.

nj


20 years

Expert:  Ely replied 1 year ago.
Thank you, friend.

OK. Sounds great. But it was clearly explained to my by the Bankruptcy attorney there was nothing I could do to stop them from taking the house (this was before the judgment).

I am not stating that you can stop them from "taking" the home. But "taking" is somewhat of am oversimplified version. They do not simply "take" property for judgment. If the property may be attached to a judgment, it is sold at auction and any money from that auction goes to satisfy the judgment. Anything left over from the auction after the judgment is satisfied is given back to you. So if they attach the home and sell it, they get their $50k, but anything over goes back to you.

The only other information I can give you is the bank is listed on the deed as a mortgage, even thou no 'mortgage' is recorded since it was a commercial loan.

At this point, it does not matter because there is a judgment and we are talking about satisfaction of judgment, which is essentially the same in any case.

Gentle Reminder: Please use the REPLY button to keep chatting, or RATE and submit your rating when we are finished.
Customer: replied 1 year ago.

Well thank you for your time in providing as much information and clarity as I needed.

Expert:  Ely replied 1 year ago.
You are very welcome. Good luck, and please don't forget to rate my answer in one of top three faces and then SUBMIT – it is the only way I get credit for my time with you – or, please REPLY to keep on chatting – I want you to be satisfied.
Ely, Counselor at Law
Category: Legal
Satisfied Customers: 86657
Experience: Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
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