Pennsylvania Deficiency Judgement Defense Lawyer
If you are a home owner in Pennsylvania and have been informed about an impending home foreclosure, you may also have become aware of what is known as a deficiency judgement. Unfortunately, the foreclosure of one’s home is the step in a series of actions mortgage holders can take to recover their losses. Creditors may also pursue what is known as a deficiency judgement after foreclosure to fully cover their losses. This practice is not prohibited by state or federal law and can further exacerbate the excess debt that created the financial problems at the start. Essentially, the foreclosure judgement can work to ensure that the individual stays in debt for a significantly longer amount of time.
What Is a Deficiency Judgement after Foreclosure?
After a lender has foreclosed on a home, he or she may realize that the price paid at the foreclosure sale does not fully cover the amount of money the lender is owed. To avoid losing money on the transaction, the lender may decide to seek the difference between the amount of the debt owed and the sale price of the home. This amount of this difference is the deficiency judgement amount. A deficiency judgment results in additional debt and often further exacerbate the circumstances that caused the financial difficulties.
When Is a Deficiency Judgement Granted by a Pennsylvania Court?
Pennsylvania law does not prohibit deficiency judgments. As its name suggests, a deficiency judgement after foreclose is only granted following the close of the foreclosure process. Furthermore, a deficiency must exist for a judgment to be granted.
A deficiency judgement must be brought as a separate action that is not part of the foreclosure proceedings. Furthermore, the timing of the action matters since 42 Pa. Con. St. Ann. § 5522[b] requires all actions for a deficiency judgement to be brought within six months. Other conditions and laws apply to constrain a lender’s approach to deficiency judgements. For instance, when the lender is the purchaser at the foreclosure sale, then the maximum value of the deficiency is limited by the fair market value of the property. 42 Pa. Con. St. Ann. § 8103[a]. However, absent relief, when a senior mortgage holder forecloses, junior mortgages are also generally foreclosed. Both senior and junior mortgage-holders may bring a deficiency judgment action if equity is insufficient to cover the obligation.
Stopping Foreclosure to Protect Your Home and Prevent a Deficiency Judgement
The most effective means of dealing with a deficiency judgement after foreclosure is often to halt the foreclosure itself. By halting the foreclosure, the taxpayer will keep his or her home. For individuals facing debt problems, protecting their family home is often the foremost concern. Thus, exploring strategies to stop the foreclosure is often a first step.
Pennsylvanians have numerous options to stop a home foreclosure. Bankruptcy through Chapter 13 of the U.S. Bankruptcy Code is one of the ways a homeowner can stop foreclosure and gain additional time to pay back his or her mortgage and other debts that may have fallen into arrears. Additional options exist to stop home foreclosures including state court litigation strategies. However, every foreclosure scenario is unique and you should be sure to consult with an experienced attorney prior to embarking on a course of action.
Can I Challenge a Deficiency Judgement after Foreclosure?
Generally, it is prudent to address the possibility of a deficiency judgment prior to a foreclosure. For instance, prior to a short sale or other negotiated settlement, the homeowner should obtain written assurances that the lender will not seek a deficiency judgement.
However, there are scenarios where a homeowner may fail to negotiate or obtain these assurances. In this situation, one option a homeowner has is to challenge the basis of the deficiency judgment calculation. One means of pursuing this strategy involves disputing the fair market value assessment. This strategy is often pursued in the Answer to a petition for a deficiency judgement. The individual may wish to raise evidence that the fair market value is overstated through appraisals, sale prices of comparable properties, and other evidence.
Work with Pennsylvania Deficiency Judgement Defense Lawyers
If you have fallen behind on your mortgage and are concerned about foreclosure and deficiency judgments, it is prudent to begin planning as soon as possible. Working with the foreclosure and deficiency judgement defense lawyers of Sadek & Cooper can help you prevent or strategically minimize the consequences of a home foreclosure. To schedule a free and confidential consultation at our bankruptcy law offices, call 215-995-2543. Our Pennsylvania law offices are conveniently located in Center City Philadelphia, northeast Philadelphia, Bucks County, and Delaware County.