QUESTION

Can a loan company seek a judgement before the foreclosure is complete?

Asked on Dec 07th, 2011 on Bankruptcy - North Carolina
More details to this question:
I used my house as collateral on a fix-up loan. The house is now in foreclosure. Can the loan company seek judgement against me, and if so can they do it before the foreclosure is completed?
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4 ANSWERS

Yes.
Answered on May 31st, 2013 at 12:05 AM

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Real Estate Attorney serving Las Vegas, NV at Kern Law
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Nevada has a "one action rule" which requires them in most cases to go after the collateral before seeking other remedies. What that means in your case is that if they attempt to get a judgment on a debt secured by property before going after the property, you can usually make a motion to stay the proceedings until the property is dealt with (i.e. until the foreclosure process is completed). You also have the option of allowing them to go forward, and if they get a judgment before completing a foreclosure sale, then the property becomes unencumbered by the debt. In most cases that is unhelpful to you, but there are some circumstances where it can be beneficial.
Answered on Dec 12th, 2011 at 8:23 AM

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Litigation Attorney serving Pearl River, NY at Law Office of Bijal Jani
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In most states, a formal foreclosure process must be completed prior to any loan company having rights to a foreclosure judgment. You should seek the advice of an experienced attorney who can review the documents and proceedings in your particular case to help you evaluate your rights.
Answered on Dec 09th, 2011 at 4:57 PM

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Business Bankruptcy Attorney serving Raleigh, NC at J.M. Cook, P.A.
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Yes on both counts. Although you don't see it very often, the bank can sue you on the note before they foreclose. What I understand from creditors' lawyers, this tactic prevents them from having to worry about the forgiveness of the deficiency provisions that can occur when the bank credit bids at the foreclosure sale (although I don't agree it is a complete defense to same). You see this action mostly in commercial loans where the creditors' lawyers are more active in collection.
Answered on Dec 09th, 2011 at 1:48 PM

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