Does bankruptcy get rid of a deficiency judgment? 14 Answers as of December 16, 2010

I lost my home to the bank, and it has been sold, but now on top of everything they have already done to me, they are issuing a deficiency judgment! If I file for bankruptcy, do I still have to pay it? Because I do not know how I possibly can.

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Stuart Jon Bierman  Attorney at Law
Stuart Jon Bierman Attorney at Law | Stuart Jon Bierman
Oftentimes a Chapter 7 bankruptcy will get rid of a deficiency judgment, but there are a few variables so I would have to talk with to get some more information before I could have a more definite opinion. I would be glad to meet with you if you would like to do so.
Answer Applies to: New Jersey
Replied: 12/16/2010
David R. Fondren, Attorney at Law
David R. Fondren, Attorney at Law | David R. Fondren
A qualified yes. Under normal circumstances they are. They could allege that you committed waste or some other fraudulent act to get the loan. There could be other circumstances I am not thinking of right now.
Answer Applies to: Missouri
Replied: 12/15/2010
Steven D. Keist, Attorney at Law
Steven D. Keist, Attorney at Law | Steven D. Keist
Yes it does.
Answer Applies to: Arizona
Replied: 12/9/2010
Law Offices of Michael J. Berger
Law Offices of Michael J. Berger | Michael J. Berger
In general, deficiency judgments are dischargeable in bankruptcy. This means that they can be wiped out and you will not have to pay them. The only exceptions to this general rule would be if the underlying debt was nondischargeable under 11 U.S.C. Section 523, the bankruptcy code section which sets forth the exceptions to discharge. Here is a copy of 11 U.S.C. Section 523, current as of December, 2010:

523. Exceptions to discharge

(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title [11 USCS 727 , 1141 , 1228(a) , 1228(b) , or 1328(b) ] does not discharge an individual debtor from any debt
(1) for a tax or a customs duty
(A) of the kind and for the periods specified in section 507(a)(3) or 507(a)(8) of this title [11 USCS 507(a)(2) or 507(a)(8) ], whether or not a claim for such tax was filed or allowed;
(B) with respect to which a return, or equivalent report or notice, if required
(i) was not filed or given; or
(ii) was filed or given after the date on which such return, report, or notice was last due, under applicable law or under any extension, and after two years before the date of the filing of the petition; or
(C) with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax;
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained, by
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition;
(B) use of a statement in writing
(i) that is materially false;
(ii) respecting the debtor's or an insider's financial condition;
(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive; or
(C) (i) for purposes of subparagraph (A)
(I) consumer debts owed to a single creditor and aggregating more than $ 600 for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable; and
(II) cash advances aggregating more than $ 875 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable; and
(ii) for purposes of this subparagraph
(I) the terms "consumer", "credit", and "open end credit plan" have the same meanings as in section 103 of the Truth in Lending Act [15 USCS 1602 ]; and
(II) the term "luxury goods or services" does not include goods or services reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor.
(3) neither listed nor scheduled under section 521(1) of this title [11 USCS 521(1) ], with the name, if known to the debtor, of the creditor to whom such debt is owed, in time to permit
(A) if such debt is not of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim, unless such creditor had notice or actual knowledge of the case in time for such timely filing; or
(B) if such debt is of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim and timely request for a determination of dischargeability of such debt under one of such paragraphs, unless such creditor had notice or actual knowledge of the case in time for such timely filing and request;
(4) for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny;
(5) for a domestic support obligation;
(6) for willful and malicious injury by the debtor to another entity or to the property of another entity;
(7) to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss, other than a tax penalty
(A) relating to a tax of a kind not specified in paragraph (1) of this subsection; or
(B) imposed with respect to a transaction or event that occurred before three years before the date of the filing of the petition;
(8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor's dependents, for
(A) (i) an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or
(ii) an obligation to repay funds received as an educational benefit
Answer Applies to: California
Replied: 12/8/2010
DiManna Law Office, LLC.
DiManna Law Office, LLC. | Dawn DiManna
A deficiency judgment on a foreclosure should be discharged in a Chapter 7 Bankruptcy. You should consult with a Bankruptcy Attorney for further information on this.
Answer Applies to: New Hampshire
Replied: 12/8/2010
    William C. Gosnell, Attorney at Law
    William C. Gosnell, Attorney at Law | William C. Gosnell
    Yes, A Chapter 7 Bankruptcy gets you a discharge from the mortgage and any deficiency judgment
    Answer Applies to: Tennessee
    Replied: 12/8/2010
    Mankus & Marchan, LTD
    Mankus & Marchan, LTD | Tony Mankus
    A deficiency judgment to a mortgagee bank is normally dischargeable in bankruptcy, provided you're not disqualified from discharge for other reasons, such as fraud. The added benefit of discharging the deficiency through bankruptcy is that you are not subject to debt forgiveness tax to IRS.
    Answer Applies to: Illinois
    Replied: 12/8/2010
    Maclean Chung Law Firm
    Maclean Chung Law Firm | G. Thomas MacLean Jr.
    Chapter 7 Bankruptcy will discharge the deficiency judgment, and you will not be liable for it. You should consult with an attorney about other options you may also besides bankruptcy.
    Answer Applies to: California
    Replied: 12/7/2010
    Law Office of Raymond J. Dague, PLLC
    Law Office of Raymond J. Dague, PLLC | Raymond J. Dague
    A bankruptcy can wipe out the deficiency judgment after a mortgage foreclosure, which is why banks have almost given up trying to obtain deficiency judgments after foreclosures in New York State.
    Answer Applies to: New York
    Replied: 12/7/2010
    The Shakoori Law Group
    The Shakoori Law Group | Rachelle Shakoori
    The deficiency judgment should be eliminated through bankruptcy.
    Answer Applies to: California
    Replied: 12/7/2010
    Royzman Law Firm
    Royzman Law Firm | Natella Royzman
    No, you will not have to pay the deficiency judgment if you file for bankruptcy. It will be discharged along with most other unsecured debts you may have.
    Answer Applies to: California
    Replied: 12/7/2010
    The Law Office of Mark J. Markus
    The Law Office of Mark J. Markus | Mark Markus
    Yes, deficiencies owed after foreclosure are usually dischargeable.
    Answer Applies to: California
    Replied: 12/7/2010
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    Yes. BK gets rid of judgments. If bank sued you for fraud, they will have to prove their case again in the BK court if they want it to stick. If it is simply for the deficiency on contract, the BK wipes it clean for good.
    Answer Applies to: California
    Replied: 12/7/2010
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