I lost my house to foreclosure and now the second mortgage is suing me can filing for bankruptcy in Florida help?

Shmucher Law, PL is a Florida bankruptcy law firm that handles individual and business bankruptcies.  For immediate assistance or to schedule a free consultation please contact our office at 305-741-5553 or 954-309-5559.

Over the last few months I have met numerous clients who have had the following happen to them:   The clients at one point owned a home that had more than one mortgage (either a 1st and a 2nd or a 1st and a home equity line) on it.  The client loses the house to foreclosure and they think nothing of it, unfortunately sometime in the future the second mortgage (or home equity line) creditor decide to take action against the debtor.  The action usually involves suing on the promissory note of the mortgage or the home equity line.  The lawsuit is for the amount owed on the second mortgage, so you can imagine getting sued for 30, 50 or even one hundred thousand dollars.  Once a judgment is entered against the debtor, by the mortgage holder, they can begin to attempt to collect either by freezing a bank account, levying personal property, or garnishing wages.

So then next question would be what can you do if you get sued by a second mortgage or a home equity line creditor on a home that was already fore closured.   There are two options that a debtor can pursue:

Settlement – The debtor can attempt to negotiate a settlement with creditor.  This option may be tough because the creditor would probably only be willing to settle if the debtor can provide a payment of between 30-50% of the debt payable in one shot.  Not many debtors will be able to come up with that much money.

Bankruptcy – The more feasible option for a debtor would be to file either a Chapter 7 or a Chapter 13 bankruptcy.    When the debtor files for bankruptcy he or she will include the amount owed to the judgment creditor as a debt owed and that debt will be discharged in the bankruptcy.  If the debtor is eligible and files a chapter 7 bankruptcy then the debtor will likely not have to pay anything back on the owed amount.  If the debtor doesn’t qualify for chapter 7 and is required to file a chapter 13 bankruptcy then he or she will likely have to make a monthly payment (pennies on the dollar) for the amounts of debts owed.  Furthermore the filing of a bankruptcy will also prevent a future deficiency judgment by the original mortgage.

If you are thinking of filing for bankruptcy and would like to schedule a free consultation in any of our office locations including Boca Raton, Fort Lauderdale, Miami, Plantation, or Sunrise Florida then please contact Shmucher Law, PL at 305.741.5553 or 954.309.5559.

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