Deficiency Lawsuits and How They Affect Foreclosed Homeowners
If you receive a deficiency judgement suit from a third party, such as Dyck-O’Neil, Inc., it is important to know your rights and options in order to protect yourself. In July of 2014, Florida law regarding deficiency judgements changed, decreasing the time in which lenders have to file a deficiency from five years to one year. As a result, the number of deficiency lawsuits in Florida has rapidly increased.
What Is a Deficiency Judgement?
When a lender forecloses on a mortgage, the sale price of the property at the foreclosure auction often does not cover the total debt owed by the borrower. In this case, the lender can file a deficiency judgement to collect the difference between the fair market value of the property at the time of the foreclosure sale and the total unpaid debt.
In Florida, in order to pursue a deficiency, mortgage lenders must first file a motion for a deficiency in which the lender will include the property’s value and the amount in deficiency (amount owed). The homeowner can respond and contest the lender’s valuation, in which case the court will hold a separate hearing on the lender’s request for deficiency liability. At the hearing, both sides have the opportunity to produce their own experts to appraise the property. Based on this evidence, the court will ultimately decide whether a deficiency judgement will be awarded to the lender and the amount of that judgement.
Who is Dyck O’Neil?
It’s important to recognize that Dyck-O’Neil, Inc., is not a bank. Dyck-O’Neil, Inc., is a third-party debt collection company that files lawsuits on behalf of banks. Since it is costly for banks to litigate a high volume of claims against homeowners, many banks sell their deficiency judgement claims at a significant discount to third-party collection companies like Dyck-O’Neil, Inc.
Major Change in Law Regarding Statutes of Limitations
On July 1, 2014, the statutes of limitations changed for the amount of time allowed to file deficiency judgements on foreclosed homeowners in Florida. For those individuals who had a foreclosure judgement entered against them before July 2013, the foreclosing lender had five years to seek a deficiency judgement. Realizing the burden that this length of time put on foreclosed homeowners, the legislature decreased the time in which banks can pursue a deficiency judgement. Now, foreclosing lenders only have one year to file for a deficiency judgement or it can never be filed. The statute of limitations for these purposes begins to run on the date the property is sold at a foreclosure sale/auction. With the recent changes in Florida law, lenders or collection companies have only one year from the foreclosure sale to seek a deficiency judgement against a borrower.
Consequences of Ignoring a Deficiency Judgement Lawsuit
If you are served with a deficiency lawsuit, one of the worst things you can do is simply ignore it. In Florida, if you lose your home to foreclosure and the lender chooses to pursue you personally for the deficiency balance, the lender can obtain a lien against any unprotected personal property and non-homestead real property you own. Ignoring a lawsuit from a lender or third party collector can result in undesirable consequences, including the following:
A. Wage Garnishment
A serious concern for many homeowners is the fear of garnishment. Florida Statute §77.01 gives judgement creditors the right to pursue a writ of garnishment. This means that a court order is granted to a third party (garnishee), to hold or attach the property of a defendant. In Florida, there are a number of exemptions you may be able to utilize to protect your assets, and the attorneys at Heekin Law are available to discuss the various ways you can protect your assets from garnishment.
B. Unsatisfied Judgement
Pursuant to Florida Statute §222.10, an unsatisfied judgement attaches to all non-homestead real property. The homestead exception in Florida offers broad protections from forced sales to meet the demands of creditors from an unsatisfied judgement. It is important to understand, however, that each case is unique. For more information regarding Florida’s homestead exemptions, contact the attorneys at Heekin Law.
C. Credit Consequences
A foreclosure and subsequent deficiency judgement will not ruin your credit score forever, however, it can have a negative effect on your ability to obtain a mortgage and other forms of credit in the future.
Contact an Attorney
If you have recently been served with a deficiency lawsuit filed by Dyck-O’Neil, Inc., or any other collection company and would like more information regarding your options, please contact our attorneys at 904-998-9733.