Can a lender get a deficiency judgement for a rental property included in a Chapter 7?
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Can a lender get a deficiency judgement for a rental property included in a Chapter 7?
I filed Chapter 7 last year. Included was a rental property for which the bank took a deed in lieu. Since we did not go through foreclosure, are we now a target for a deficiency judgement even though this property was included in the filing?
Asked on February 17, 2012 under Bankruptcy Law, Ohio
Answers:
MD, Member, California Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Your property may be considered in a deficiency judgment if you don't live in an anti-deficiency jurisdiction and if in your state a deed in lieu in combination with a bankruptcy is not sufficient to eradicate or discharge the remainder of debt owed. Talk to the trustee in charge to see if the order makes any mention of the deficiency or if it mentions the deed in lieu at all. You no longer have the property I assume so I don't think the likelihood is high that you will be sued for the deficiency especially if the debt was included in the bankruptcy.
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