Possible Deficiency Judgement/Claim bankruptcy?

Possible Deficiency Judgement/Claim bankruptcy?
I have some clients who I helped purchase a home in Sept. Prior to the home, the husband owned a mobile home in a MH park. The husband sold the mobile home to someone subject to his financing until the buyer could replace the financing. The mobile was only worth about 1/2 of what it was financed for (financed for $54,000, worth about $25,000). Unfortunately, the buyer failed to continue to make payments and the mobile was repo/foreclosed upon in my client’s name. My clients’ home is 100% mortgaged and their credit was impecable before this. They have asked my advice as to what they should do. I did advise them to homestead their home, but they asked me if they should claim bankruptcy. I told them I didn’t think they should file bankruptcy because I didn’t feel it was likely they would have a deficiency judgement against them as there wasn’t any equity in their home yet and that they could protect some equity with a homestead. I did tell them I would try to get more professional advise, though, so here I am. I would really appreciate some feedback. Thank you.

One thought on “Possible Deficiency Judgement/Claim bankruptcy?

  1. Re: Possible Deficiency Judgement/Claim bankruptcy?
    Assuming it’s a UCC Article 9 sale, there are no substantial restrictions on when or how the creditor obtains deficiency liability. In that case, the homestead protects the new residence, but not wages. Assume all other property is exempt. Credit is marred by large public record judgment. I recommend bankruptcy only as a last resort. I don’t see it as indicated on the limited facts presented.

    Paul Malikowski
    Malikowski Law Offices, Ltd.
    Post Office Box 9030
    Reno, NV 89507-9030

Comments are closed.