Filing Bankruptcy When Your Home Is in Foreclosure

Interviewer: Let’s talk about foreclosure. Are there any mistakes people make in regards to their house if it’s in foreclosure, or has been foreclosed on?

John Reade: The issue normally is whether their home was foreclosed on, can they be legally pursued for a deficiency.  A deficiency is the difference between what the creditor or mortgage holder/bank sells the home for after it’s foreclosed on, and what is owed to the creditor or mortgage holder/bank.

Usually a seller cannot pursue a person for a deficiency on a home that has been foreclosed on when their was only one loan, and other times they can. It is usually a important to determine whether the creditor can or can not pursue a deficiency on a home that has been foreclosed on; and therefore whether there is any need to file bankruptcy, or there is no need to file bankruptcy.

Interviewer: What do you mean the mortgage holder?

John Reade: The mortgage holder would be the bank that holds the first loan or first mortgage or trust deed or the holder of the second loan or second mortgage.

Interviewer: Any other mistakes you can think of?

John Reade: Again, the common mistakes I see are not listing assets, not properly claiming exemptions, or not using the proper federal bankruptcy exemptions or Oregon exemptions.

As far as not listing assets, people might think, “I don’t want to list this asset. If I do, it can be taken away.” Sometimes that is true. However, often an asset can be protected. So there usually is no reason for someone not to list an asset.

It Is Advisable to consult with a Bankruptcy Attorney before Deciding Not to List an Asset, Especially When Omitting an Asset May Cause Your Bankruptcy Discharge to Be Denied

Some people may think, “This asset is not of significant enough value to list, so that is why I didn’t list it.” Not listing an asset can create problems, even if you do not think the asset is worth enough money, to list or disclose.

Interviewer: What is the threshold? Is the threshold any item over $100 dollars?

John Reade: There is no dollar amount as far as a threshold. If you are not sure about an asset that is a good reason to have a bankruptcy attorney go over that issue with you and decide what to do. A bankruptcy attorney can also provide sound advice on how to arrive at a value for an asset.

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