When a mortgage loan is taken out, typically two documents are signed, a promissory note and a security agreement (mortgage). The promissory note ensures the repayment of the loan. On the other hand, the security agreement allows for the home to be collateral for the loan. Often, a foreclosure auction in Florida will not provide enough money to pay the loan in full. In cases such as these, the bank may then try to sue the homeowner for the remaining balance (deficiency) based on the promissory note. Fortunately, there are ways to stop a mortgage deficiency in Florida. If you are at risk of foreclosure or if the home has already been foreclosed, contact a foreclosure defense lawyer in Tampa for assistance with how to stop a mortgage deficiency in Florida.
What is a Mortgage Deficiency in Florida?
A mortgage deficiency arises when the foreclosure auction does not yield a price high enough to cover the loan balance. For example, if a bank foreclosed on a home due to a $150,000 debt, but the home only sells for $95,000, the bank is still owed $55,000. Because the highest bid did not cover the full mortgage balance due, the remaining $55,000 is called the deficiency. The lender can then potentially sue the borrower for the deficiency. See Florida Statute 702.06. This is one of the many reasons why if you are facing foreclosure you should seek the advice of a foreclosure defense lawyer in Tampa.
How to Stop a Mortgage Deficiency in Florida
There are potentially a few options for homeowners who need to stop a mortgage deficiency in Florida. For instance, a homeowner can engage in a short sale, deed in lieu of foreclosure, loan modification, negotiate settlement with the bank, or file for bankruptcy. Each of these options come with their own unique set of requirements and potential disadvantages. For more information on each of these options contact a Tampa foreclosure defense lawyer for legal advice.
How to Stop a Mortgage Deficiency in Florida with Bankruptcy
For some homeowners, bankruptcy is the best solution to stop a mortgage deficiency in Florida. Under Bankruptcy law, a discharge will void a judgment, “to the extent that it is a determination of the personal liability of the debtor. If a debt is discharged in bankruptcy the borrower (debtor) will be released from all liability on the debt. The discharge is a permanent court order releasing the borrower from the responsibility of having to pay the debt. Further, the discharge prohibits a creditor from taking any collection action against the borrower. Therefore, the discharge will prevent and stop a mortgage deficiency in Florida.
Bankruptcy law 11 U.S.C. 524(a) precludes creditors from trying to hold the debtor personally liable for a discharged debt. For instance, threatening to garnish wages or sue the debtor can be a violation of debt collection laws. A willful violation of the ban on collection activity can lead to sanctions being imposed on the creditor. These sanctions can include an injunction, monetary sanctions, reimbursement of funds paid by the debtor, and even punitive damages. Additionally, the creditor may be responsible for reimbursing a debtor for the money spent on an attorney to stop the collection action. See bankruptcy case In Re All Media Properties
Foreclosure Defense Law Firm in Tampa
Bankruptcy is not the only way to stop a mortgage deficiency in Florida. At Florida Law Advisers, our foreclosure defense attorneys fight the foreclosure and legally challenge the lender’s right to foreclose. Our experienced legal team will scrutinize every aspect of your mortgage for any evidence we can use against the lender. We will dedicate all of our legal knowledge and skills in the courtroom to help prevent the foreclosure and keep you in your home.
The right course of action to stop a mortgage deficiency in Florida will depend on the circumstances of each case. To see which options may be available to you, contact us to today to schedule a free, confidential consultation with a Tampa foreclosure defense attorney at our firm. During the consultation, an experienced foreclosure defense and Tampa bankruptcy attorney will carefully review the facts of your case and help you choose a course of action that is best for your individual needs. Call us at 800 990 7763, we are available 24 hours a day, 7 days a week.