Nevada Foreclosure Procedure
How to Avoid Foreclosure? (Part One)
By Malik W. Ahmad,
Attorney & Counselor at Law
NOTE: This article is three part series on foreclosure and related issues, and only meant for education purposes. There is no legal advice given, or any kind of attorney client relations are created. Readers, if they still have question, should contact a licensed attorneys. However, smaller question of general education nature can be answered by Attorney Malik Ahmad via his Loan Modification blog. Thanks.
I think it is good time that I discuss here about deficiency judgment. I have been getting lots of calls lately about deficiency judgment.
Deficiency Judgment—–Where will the Money come From?
Let us say the foreclosure brings lesser money than the appraised value of the home which the borrower had borrowed from the lender, would a foreclosure absolve that deficiency? Of course, not. The borrower still owes that surplus money to the lender, and it is looming on his head like a sword of Damocles. The beneficiary is entitled to bring an action for a deficiency within six (6) months after the foreclosure in the case of a single parcel lien or six months after the last, but not more than two (2) years after the first, sale in the case of multiple parcel collateral. NRS 40.455.
The court would not permit an award of a deficiency judgment, exclusive of interest after the date of such sale, in an amount exceeding the difference between the amount for which the property was actually sold at the trustee’s sale. The amount of indebtedness is called the deficiency and a judgment from a court can be sought for this amount. The court is also not permitted to render a deficiency judgment for more than the amount by which the amount of indebtedness which was secured by the deed of trust at the time of the trustee’s sale exceeded the fair market value of the property at the time of such sale as determined by an appraisal hearing, with interests from the date of the sale. (NRs 4-.459.
What is an automatic stay under the Bankruptcy?
Though this topic requires a full discussion at its own merits, I would briefly touch it here. The automatic stay under 11 USC Section 363 applies to property of the bankruptcy estate. Property of the estate is defined broadly as all legal or equitable interests of the debtor in property as of the commencement of the case. (11 U.S.C. Section 541)
The automatic stay under 11 USC Section 362 is designed to give the bankruptcy court an opportunity to harmonize the interests of both debtor and creditor while preserving the debtor’s assets for repayment and reorganization of his or her obligations. The automatic stay is one of the fundamental debtor protection provided under the bankruptcy law. It definitely gives the debtor a space for sustenance from creditors for sometime. It gives him time to reorganization or for a repayment plan. This automatic stay is not permanent. Filing of a bankruptcy petition operates as stay of any act by a creditor to create, perfect, or enforce any lien against property of the debtor. Action taken in violation of the stay are null and void. The automatic stay is an injunction issuing from the authority of the bankruptcy and there are sanctions for violating the stay like contempt of court