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.