Should I file before I recieve a judgement after a foreclosure

[thomegunn]

I live in PA and had two investment properties in FL. Both properties have been foreclosed. One of them was resold in 2009 and I have not received a 1099 for it. My bk attorney says to file bk ch 7. My accountant and her tax lawyer say that I should wait until I receive a judgement against me before filing. They said that I may never receive a judgement and that filing for a bk should wait until that time. I don not want to file unless I have to my other debts a very manageable. I want to purchase another property in FL for my retirement home, but I am worried about losing it if I get a judgement against me. I would be filing as a single person as my wife's name is not on the foreclosed properties.

[free2breathe]

I'm certainly not well versed on this, but I did do some research and found this:
"Please note, in a potential deficiency judgment situation arising out of a foreclosure action, in the state of Florida the lender has only one year from the date of the foreclosure sale to file a motion with the court to seek a deficiency claim based upon the foreclosure action. However, if a separate suit is brought based upon the promissory note a lender has up to five years from the foreclosure sale to pursue a deficiency. Additionally, lenders may also assign the right to this claim to a third party."

Because bankruptcy is such a huge blow, I would be inclined to listen to the tax attorney and accountant. You never know what might happen financially between now and such time as a deficiency judgment may be sought against you. That is just my opinion, and of course others who are more familiar with this scenario will correct me if I'm wrong ;)

[tcreegan]

Hi thomegunn,

2 out 3 of your professional advisors say to wait.....

...of course the tax guys want to wait for tax issues, and the Bk guys says file. Sometimes when all you have is a hammer, all problems start to look like nails....

Welcome aboard!

Tom in Colo

[tobee43]

I'm certainly not well versed on this, but I did do some research and found this:
"Please note, in a potential deficiency judgment situation arising out of a foreclosure action, in the state of Florida the lender has only one year from the date of the foreclosure sale to file a motion with the court to seek a deficiency claim based upon the foreclosure action. However, if a separate suit is brought based upon the promissory note a lender has up to five years from the foreclosure sale to pursue a deficiency. Additionally, lenders may also assign the right to this claim to a third party."

Because bankruptcy is such a huge blow, I would be inclined to listen to the tax attorney and accountant. You never know what might happen financially between now and such time as a deficiency judgment may be sought against you. That is just my opinion, and of course others who are more familiar with this scenario will correct me if I'm wrong ;)

this is REALLY interesting info ...actually some one this morning just posted in the florida discussion forum about the fact that florida is a deficiency state...(along with 22 other states). the time lines are what is most interesting about your research...if you don't mind i'm going to put a link to this thread so other florida residents can read it.

i do know, although i now live in florida, the property we have in nj...(nj by the way, and i have posted this a few times...is in fact, one of the only states that has no caps on foreclosure fees and costs), and topping that off with the fact it is also a deficiency state forces those that had only intended to deal with a foreclosure ended forced to file bk because of the accrued costs and fees associated with the foreclosures...

[thomegunn]

Free2breathe, Does the lender have one year from the foreclosure date or one year from the date the foreclosed property was resold. And again is it five years from the forclosure date or five years from the date of resale of foreclosed property.

[free2breathe]

Free2breathe, Does the lender have one year from the foreclosure date or one year from the date the foreclosed property was resold. And again is it five years from the forclosure date or five years from the date of resale of foreclosed property.

According to the paragraph I copied, from the date of the foreclosure sale.

[free2breathe]

From what I understand, the deficiency they are allowed to come after is only the deficiency between the amount owed by you and the amount that the bank buys the property back for at the foreclosure sale (assuming a private party doesn't come forward at a foreclosure sale and buy it...not very often that happens anymore).

If the bank then turns around and sells that same property as an REO at a discounted price, it is my understanding that that is just their loss. They bought the property back at the foreclosure sale price listed in the foreclosure sale documents, and that is the figure that must be used to figure the deficiency. Again, this is my understanding....I could be wrong.

[thomegunn]

I read that the bank can do one of two things, either sue for the deficiency or write it off as a loss, but not both. Since I did not get a 1099 for the loss to them, I guess I have a good chance of being sued in the next couple of years.

[tcreegan]

Hi all, free2breathe, you are rocking along here! All good advice.

I read that the bank can do one of two things, either sue for the deficiency or write it off as a loss, but not both.

This is not settled in Florida, courts need to rule on this. In other states (say Penn.) courts have ruled that writing off a loan and issuing a 1099 is accounting practice and does not extinguish the lenders right to pursue the deficiency.

And to add to the stat. of lim. issue, if they get a judgment it becomes 20 yrs.

Good luck to you thomegunn, let us know how it all turns out!

Tom in Colo

[free2breathe]

This was also on that same site that I quoted above. Very interesting.....

"The lender has the option to collect part of the deficiency and to cancel part of the deficiency, but they cannot do both and collect the entire debt as well as report the debt as cancelled. For example, if the fair market value of the property on the date of the foreclosure, as determined by the bank’s appraiser is $350,000.00 or alternatively if the value of the property at the time it is deeded back to the bank has an outstanding loan balance of $500,000.00, then the deficiency amount would be $150,000.00 representing the difference.

Under this scenario a lender could elect to collect the $150,000.00 shortfall or report the $150,000.00 as cancelled debt. The lender could also collect $75,000.00 and report $75,000.00 as cancelled debt. In some cases, the lender may elect to cancel 100% of the debt if they can receive a greater benefit by showing this loss on their books. Unfortunately, one would have to be telepathic to know how they will proceed."


If either of you would like the site I am finding this at, I'd be more than happy to pm the url to you.