An action filed in a federal bankruptcy court that allows a creditor to reorganize or discharge credit obligations due to insolvency. A property owner may halt foreclosure action by filing bankruptcy. Bankruptcies remain on a credit record for seven years and can severely limit a person's ability to borrow.
Chapter 7 - "Debtor Wipeout" The court oversees the liquidation of the debtors' non-exempt assets, distributing the cash proceeds proportionally amongst their creditors.
Chapter 11 - This is a business reorganization proceeding.
Chapter 13 - "Debtor Workout" This is the almost-automatic choice of most trustors seeking to use a bankruptcy filing to delay the in- evitable trustee's sale as long as they can. The purpose of this proceeding is to give a "wage earner" time for rehabilitation . . . a temporary respite free from the collection efforts of creditors.
Credit report
A document from a credit bureau setting forth a credit rating and pertinent financial data concerning a person or a company and used by banks, merchants, suppliers and the like in evaluating a credit risk.
Debt
A sum of money due by a certain and express agreement; a specified sum of money owing to one person from another, including not only obligation of debtor to pay but the right of the creditor to receive and enforce payment.
Debtor
An entity that owes a debt; one who owes a debt.
Deed in lieu of foreclosure
A process whereby the owner, with the approval of the lender, deeds the property to the lender to avoid foreclosure. Lenders are generally reluctant to accept a "deed in lieu" unless the title is free and clear of any other encumbrances junior to theirs and the owners execute an estoppel affidavit acknowledging that they are acting volitionally, with informed consent.
Default
The failure to make payments in full, on time or at all or to live up to any other obligations placed on the borrower by the loan agreement.
Deficiency judgment
A judgment entered in a lawsuit when a property is sold for less than the amount of the loan.
Delinquency
A condition when the payment is being late but not yet in default.
Demand Letter
Also known as a Breach Letter or Notice of Intent to Foreclose. Notice to the borrower that he/she is in "breach" of the terms of the Note and advising of the right to "cure" the default.
Eviction
The act of depriving a person of the possession of land or rental property that he has held or leased.
Foreclosure
A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document. The foreclosure procedure brings the rights of all parties to a conclusion and passes the title in the mortgaged property to either the holder of the mortgage or a third party who may purchase the realty at the foreclosure sale, free of all encumbrances affecting the property subsequent to the mortgage.
Garnishment
A statutory proceeding whereby person's property, money, credits in possession or under the control of, or owing by, another are applied to payment of the former's debt to third person by proper statutory process against debtor and garnishee.
Judgment
The final decision of the court resolving the dispute and determining the rights and obligations of the parties.
Judicial Foreclosure
A foreclosure process which is executed via a court action.
Junior lien
A lien that is subordinate or junior to a senior lien.
Lender
He from whom a thing or money is borrowed.
Lien
A claim or charge on a property for payment of some debt, obligation or duty.
Mortgage
An interest in land created by a written instrument providing security for the performance of a duty or the payment of a debt.
Mortgagee
The entity, usually a bank or financial institution, who lends money to a borrower.
Mortgagor
The person who borrows the money from a lender to purchase a property.
Pre-Foreclosure
Term used to discuss delinquent properties before they go to the foreclosure auction.
Quit Claim Deed
A deed of conveyance that releases any title, interest, or claim, which the grantor may have in the premises.
Redemption Period
The time allotted to the mortgagor to reclaim his/her property after it has been sold at an auction. Not all states have a redemption period.
Sheriff's Sale
The sale of a property to satisfy a debt or judgment.
Short Sale
The sale of a property under or at market value that's lower than the loan balance.
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Common Terms
The materials contained within this page may not be reproduced without the express written consent of REALTY PRO, LLC. The information herein is believed to be accurate and timely, but no warranty as such is expressed or implied.