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  1. #1

    Default Judgment Holder Forcing a Sheriff's Sale in Alabama

    I'm in a bad situation.

    I was a part of a business that failed. The business is gone, but I was the personal guarantor for some equipment and the creditor got a judgment against me personally for $400,000.

    I received notice today that the creditor is planning to have my personal home sold at auction to enforce the judgment.

    I have an existing 1st mortgage on the house with a balance of $240,000. I am current on all payments. I also have a second mortgage with a balance of $48,000. I am current on all 2nd mortgage payments, too.

    Another lingering problem of the failed business is that our CFO talked me into pledging my home as collateral for a business line of credit. Now that the business is gone, I am responsible for the $500,000 line of credit. I am not current on the interest only payments on the $500k. The line of credit is 3rd in line.

    My home has a 2005 appraisal of $677k. That was at the height of the real estate market. Nothing in our neighborhood has sold in over a year, and there are only a few other homes in the neighborhood that are worth as much as ours.

    Am I correct in assuming that the company that obtained the judgment is 4th in line? Do they have to totally pay off the 1st ($240k), the 2nd ($48k), and the business line ($500k) -- a total of almost $800k -- before they can take the property?

    Since the property is probably worth less today than it was in 2005, what's realistically going to happen?

    Please help.

  2. #2
    Join Date
    Mar 2005
    Location
    Michigan
    Posts
    28,906

    Default Re: AL Judgment Forcing Sheriff Sale - 4th In Line

    I suggest consulting a bankruptcy lawyer on Monday morning.

  3. #3

    Default Re: Judgment Holder Forcing a Sheriff's Sale in Alabama

    Thanks for the quick reply. That's on my to do list, but I thought I might get some feedback that answered the question.

  4. #4
    Join Date
    Mar 2005
    Location
    Michigan
    Posts
    28,906

    Default Re: Judgment Holder Forcing a Sheriff's Sale in Alabama

    If they foreclose, and the foreclosure does not result in enough money to pay off lenders with priority, they may take nothing from the sale and end up having to pursue you for a deficiency. That leaves you without a home, possibly also being sued by the lender from the business line of credit who will wish to protect its now-unsecured loan.

  5. #5

    Default Re: Judgment Holder Forcing a Sheriff's Sale in Alabama

    That's much more helpful.

    What protection will bankruptcy give me?

  6. #6
    Join Date
    Mar 2005
    Location
    Michigan
    Posts
    28,906

    Default Re: Judgment Holder Forcing a Sheriff's Sale in Alabama

    You may be able to discharge the personal guarantee, and you may be able to "cram down" the business equity line to the amount of your home equity.

  7. #7

    Default Re: Judgment Holder Forcing a Sheriff's Sale in Alabama

    I spoke with a bankruptcy attorney about a year ago and didn't want to proceed at the time because it seemed like he only had one canned solution for everyone that walked in the door -- total liquidation, no restructuring, lose my house guaranteed. Another one I spoke with on the phone was suggesting the same quick (and easy for him) solution.

    I've spent the past year rearranging my business, and have it heading toward a total turnaround in the next six months. Unfortunately, I may not have six months...

    Should I be looking for a specific type of attorney that can help me buy time and restructure instead of throwing everything away?

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