what happens to the overpayment of foreclosure judgment amount in pasco county florida auction?

Outset, know that you lot can't be thrown in jail for not paying your debts (with the exception of back child support, if you could pay but don't). And a creditor can't but accept money from your banking company business relationship or grab your tax refund—unless you owe back taxes or you lot've defaulted on a pupil loan. To collect a debt, the general rule is that most commercial creditors must kickoff sue yous and win a money judgment (a courtroom award) against you.

But, at that place is a big exception to this rule: Creditors don't have to sue outset if the debt is guaranteed by collateral. Common examples are a car loan where the motorcar you bought is security (collateral) for the loan, or a mortgage or abode equity loan where the business firm itself is pledged every bit collateral (though in most half of the states, a lender has to go to courtroom before foreclosing).

Because yous may be upwardly against some lenders with sophisticated financial knowledge and legal resources, it'due south important for y'all to understand the legal status of each and every one of your debts and what each creditor's rights are.

Debts and creditors fall into dissimilar types of legal categories, meaning that some of your creditors take more rights to collect and a bigger power to negatively affect you and your concern than do others. The 2 main categories of debts and creditors are secured and unsecured.

Secured vs. Unsecured Creditors

A secured creditor is any creditor to whom you or your business has pledged collateral in substitution for a loan, line of credit, or purchase. Collateral might be business organisation property, such as inventory and equipment, or your ain property, such equally your firm, car, or gunkhole.

There are also "involuntary secured creditors"—those who have filed a lien (legal claim) against your property because they have a judgment against you or you owe a tax debt.

Either style, if yous or the business tin can't pay back the debt, a secured creditor can repossess or forestall on the secured property, or lodge information technology to be sold, to satisfy the debt.

An unsecured creditor is one to whom no collateral has been pledged and who hasn't filed a lien. Typically, unsecured debts include credit menu charges and amounts your business owes for inventory, function supplies, effects, hire, and advert, equally well as what's owed for services such as maintenance, equipment repair, or professional advice.

Secured Debts

Many businesses owe secured debts—businesses typically pledge collateral for credit lines, and business owners often pledge their personal belongings for business organisation debts. Allow'southward have a expect at how rapidly lenders can call in or forbid on collateral when a secured debt is not paid.

Repossessions

Equally you probably know, if you miss a payment or ii on your machine loan (and, as is typical, the loan was used to buy the car and is secured by the car), the lender has the legal correct to physically repossess the car and sell information technology to recover the coin you owe, plus the costs of the sale and chaser'south fees. To practice this, the lender doesn't have to get permission or a court judgment. Nether the terms of the contract y'all signed with the lender, a repo human can simply reclaim the lender's holding. (In many states, the lender doesn't have to give you notice of the repossession; you volition just wake up and find your machine gone.) When all is said and done, you volition still owe the difference between what the lender sells the car for and what you owed on the loan, called a "deficiency." Likewise, the repossession will announced on your credit report for seven years.

Cars are the most unremarkably repossessed blazon of holding, but if yous borrowed money to buy business equipment or machines and used the purchased equipment as security, the creditor will have the same repossession rights. Too, some department store credit cards provide that the creditor automatically takes a security involvement in the belongings y'all buy, so if you don't pay the bill, the creditor might endeavor to repossess the holding. However, because creditors must get a courtroom order to enter your house or business, repossession of holding other than vehicles is rare.

Similarly, with leased vehicles or business equipment, if y'all miss a charter payment, the leased property tin can unremarkably exist immediately reclaimed without a court order.

Foreclosures

If you take a mortgage or deed of trust on your house, or an open dwelling house equity line of credit, yous must make payments on time to keep the house. If you don't, the lender can and probably will foreclose on your business firm, because it is collateral for your debt. But foreclosures are not as quick as vehicle repossessions. In half of the states a lender has to go to court before foreclosing, and in the other half, accelerate notice is required from the lender.

Similarly, if you pledge your business firm as collateral for a business loan or line of credit and yous default on that loan, the lender tin foreclose on your business firm. (In this state of affairs, the lender must always file a foreclosure action in courtroom, no matter what state you're in.) To avoid having the lender prevent, you must either repay the debt or, if the debt is more than your equity in the house, at least pay the lender that amount and so that information technology no longer has a reason to foreclose.

The foreclosure process works differently in different states. In some states, the lender must file a lawsuit to forestall on a house (called judicial foreclosure). In others, information technology can foreclose on property without going to court (nonjudicial foreclosure). A judicial foreclosure typically takes several months longer than a nonjudicial foreclosure (though in California a nonjudicial foreclosure can take a yr or more than), giving yous time to save some money and, if necessary, detect a new place to live.

Avoiding Foreclosure

If yous're behind on your mortgage, you might be able to negotiate a loan modification with your lender. For example, the lender might hold to add your missed payments to your loan rest, to stretch out your loan over a longer term, or to convert an adaptable rate mortgage to a fixed-rate one. Your other options are selling your home for less than you lot owe (called a curt sale), returning the human action to the lender (called a deed in lieu of foreclosure), or refinancing through the Federal Housing Administration (FHA) or the Homeowner Affordability and Stability Plan. For up-to-date information about your options if you are facing foreclosure, see The Foreclosure Survival Guide, by Stephen Elias (Nolo).

Filing for defalcation can filibuster foreclosure. When you file for bankruptcy, all creditors, including mortgage lenders, must terminate collection activities and foreclosures. Nonetheless, the lender can ask the bankruptcy court for permission to keep with a foreclosure if y'all're behind on your payments, so a bankruptcy may filibuster a foreclosure only a couple of months. (For more on bankruptcy in general, come across Nolo's Defalcation Center.)

Unsecured Debts

Unsecured creditors such as credit card companies and most merchandise creditors must first sue you and win a money judgment against you before they grab your income and property. This is true whether you are personally liable for the debt (as is the case for sole proprietors and partners, or because you signed a personal guarantee for your corporation or LLC) or whether only your corporation or LLC is liable for the debt. (Learn whether you're personally liable to pay your business's debts.)

Typically, nevertheless, before seriously considering a lawsuit, a creditor will try to collect the debt for several months so turn it over to a collection attorney or agency, which will restart the process. In some instances, the creditor will conclude that you don't have plenty property that tin can easily be grabbed to pay off the judgment, and won't bother suing.

For example, say your house is worth less than yous owe on your mortgage, meaning that there is no equity in it for creditors to have. Likewise suppose that your consignment shop has few business assets and is doing so poorly that you don't anticipate having more than a few dollars of steady income that a creditor could grab (past ordering the sheriff or marshal to take coin from the business premises). Your creditors, or whatsoever collection attorney or agency your debt is turned over to, may not sue you because they know it'due south unlikely they could collect the money judgment. That'south called being "judgment proof."

Instead, the creditor may simply write off your debt and treat it every bit a deductible business loss for income taxation purposes. Typically, in 5 or six years, depending on your country'due south statute of limitations, the debt will become legally uncollectible. (Just a few states, such as Kentucky, Louisiana, Ohio, and Rhode Island, take longer statutes of limitation, up to 10 or 15 years.)

However, you tin expect to be sued if there is significant money at stake and you lot have valuable personal or business concern assets (or but business assets, if your business is a corporation or LLC)—or if the creditor expects you to larn significant assets in the future. For instance, if you lot are a sole proprietor and have an advanced degree, your creditor might presume yous'll eventually make a decent salary and will sue you now—and just expect for you to brand some income. (In many states, a court judgment can be collected for at least 10 years.)

What does a creditor think is worth suing for? Significant amounts of cash or accounts receivable, valuable business equipment and property, and, if you're personally liable for a debt, valuable personal avails such as jewelry, fine art, collectibles, antiques, motorcycles, expensive bicycles, boats, or a vacation firm.

Don't try to hibernate avails. Sometimes, out of agony, a business concern owner tries to protect personal or concern assets by giving them to friends and relatives or otherwise trying to hide them from creditors. Although few small business organization people have the knowledge necessary to move cash to an offshore banking company account, many try to hide it in the proper noun of a parent, child, coworker, or friend. Don't do this. Creditors' attorneys are experienced in ferreting out such hidden assets, and in extreme cases, these tactics can even requite ascension to ceremonious and criminal charges of fraud.

If a creditor does accept you to courtroom and wins a judgment against you lot, it obviously makes sense to pay the courtroom judgment earlier any other unsecured debts that you haven't notwithstanding been sued over. (Encounter Nolo's commodity on Prioritizing Which Business organization Debts to Pay First.)

How a Creditor Must Collect a Judgment

Collecting a judgment is harder than winning information technology. If a creditor has gone to courtroom and won a judgment against you for collection of an unsecured debt, theoretically the creditor (now called a judgment creditor) will be able to take any cash in your business's bank account, your business organisation income, and your concern assets to pay off the debt. If you're a sole proprietor or partner, or you signed a personal guarantee for a debt, the judgment creditor could also garnish your wages and take money from your personal bank account, as well as accept your nonexempt personal property, to pay off the debt. Nonetheless, to take money or property, the creditor must beginning locate it and and so get a court order and pay the sheriff to take it.

Probably the most common drove method is for a creditor to obtain a writ of garnishment, nether which a sheriff could garnish 25% of your wages to pay the debt (except in Pennsylvania, Due south Carolina, and Texas, where garnishments are not allowed). But bold you are a cocky-employed business owner without a side chore, garnishing your wages will be pretty difficult since you lot don't go a paycheck (unless yous're an employee of your corporation). Notwithstanding, your spouse's wages could exist garnished to pay your business debts if you live in a community property country (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), assuming your spouse is named in the court judgment.

Frequently a more than effective collection technique (if your business concern sells goods or services for greenbacks) is for the sheriff to come to your business organization and take whatever money he can find there—in the cash register (chosen a "till tap") or on your person. Or a sheriff could be authorized to take concern vehicles, equipment, or tools of the trade to pay your debts, something that volition happen just if those items are clearly worth more than you lot owe on them. It'southward also possible that the creditor could become a court to order your bigger customers and clients to pay whatever coin they owe you lot directly to the courtroom.

Still, near creditors won't go to these lengths to get your property. Instead, many will just adhere a "judgment lien" to whatsoever real estate or assets the business owns (or valuable personal property or real estate that you own, if you are personally liable for the debt). The lien will allow the creditor to collect the debt when you sell or refinance the property.

Bank check to see if any liens are recorded against your business concern. The Secretarial assistant of State's office in every state maintains a registry of liens, listing judgment liens, taxation liens, or security interests that creditors merits in your property. You lot can exercise a Compatible Commercial Code (UCC) records search online at your Secretary of State's website to search for your personal and concern names to come across what liens have been recorded against you. If you find any incorrect information—say yous have paid off a debt but information technology hasn't been reflected—enquire the lender in question for a UCC release, something that is required by law.

About Wage Garnishment

If you do take regular wages coming in, perhaps from a side job or because yous are an employee of your corporation, your wages tin be garnished to enforce a court judgment. The total amount your creditors can take from your wages is 25% of your net pay. That limit applies whether y'all have one creditor or many. And if your wages are low, there are additional protections—you lot must be left with weekly income equal to xxx times the federal hourly minimum wage. (A few states take lower limits.) Only if yous owe back kid support or dorsum taxes and your wages are being garnished, expect to lose a much larger pct of your wages—l% or more than, depending on whether you are supporting others. Social Security checks, retirement program proceeds, unemployment and disability benefits, or workers' compensation awards cannot be garnished, except to pay federal taxes or child support (or unless they accept accumulated in your bank account).

Exempt Property—What a Judgment Creditor Can't Take

Although a judgment creditor can usually grab greenbacks from your banking concern account or force the sale of most business assets, a judgment creditor can't take personal holding that is legally exempt from creditors. Most states provide that a certain amount of your personal assets, such equally food, article of furniture, and clothing, cannot be taken past creditors or past the bankruptcy trustee in defalcation court. In addition, most states exempt from creditors:

• the equity you ain in one vehicle, up to a certain amount—commonly from $1,000 to $5,000, and
• a significant amount of the equity in your firm—ofttimes between $10,000 and $50,000, depending on the state.

Find your state's exemptions. To notice out how much your state exempts for your vehicle and firm, and a complete list of exempt property, meet our section on defalcation exemptions.

Most states also let y'all keep a couple of m dollars' worth of business equipment and tools of the trade, equally well as money in revenue enhancement-deferred retirement plans. Likewise, in near states (except community property states, discussed above), a creditor tin can't take property that belongs to you and your spouse if the debt is in your name only. (For more information, encounter Spouse and Partner Liability for Jointly Endemic Debt.) The practical upshot of these exemptions is that, no affair how many debts you accept and no matter how many judgments are entered against you, creditors tin't catch much essential property.

Case: For years, Dax's hobby has been restoring classic cars; he owns ii himself, a '64 Shelby Cobra and a '59 Cadillac Eldorado. Subsequently being urged by his friends to quit his solar day job to do what he loves, Dax opens his own shop that offers custom auto detailing, paintless paring repair, machine painting, and classic car restoration. He applies for a business license, rents a pocket-sized warehouse in an industrial area, buys two machine lifts, and increases his enshroud of tools, which was already sizable. To pay for everything, he takes a personal equity line of credit out on his house, after striking out in his attempts to become a banking concern line of credit for the business. Unfortunately, near as presently every bit Dax opens his doors, the economic system declines, and people cut dorsum on luxury services such as regular machine detailing, and fifty-fifty paring and ding repair. At the same time, many classic car enthusiasts are forced to put their hobbies on agree. As a result, Dax doesn't bring in plenty money to cover his costs, tin't pay his rent, and goes out of business organisation, leaving a mountain of debts.

If he is sued or has to file for defalcation, here is what he has to lose and what he should be able to hold on to:

Since Dax lives in California, is married, and has only $60,000 equity in his business firm (he owes $300,000 and the house is worth $360,000), he will get to keep his firm (California law exempts $75,000 of equity for families). He will as well go to concur on to his clothing, furnishings, and appliances. He will exist able keep but $2,550 in equity in personal vehicles, and then he is likely to lose his classic cars. He volition also be able to keep up to $half dozen,750 in business avails, if he has fully paid for them and if he continues to use them to make a living, including tools, equipment, and a commercial vehicle. Unfortunately, the rest of his concern assets will likely be taken. He also stands to lose the money in his business banking company account, as well equally his personal bank account, considering he was a sole proprietor. If he gets a new job, up to 25% of his wages could also be garnished. And if Dax's wife brings home an income, 25% of that income can be garnished to pay the business's debts, if his wife is listed in the judgment. (If Dax files for bankruptcy, however, the wage garnishments will stop.) Fortunately, Dax's IRA is safe from creditors.

Defalcation can get rid of unsecured debts. If you have been sued or have been threatened with a lawsuit, you're at hazard of losing cash or belongings. If the bulk of your debt is unsecured and you accept little chance of paying it off, you might consider defalcation, which tin can get rid of most, if not all, of your unsecured debt. For more information on defalcation and alternatives, see Nolo'southward overview of bankruptcy for small businesses. Also, if you decide to shut your business'south doors, see Nolo'due south section on Going Out of Business organisation, for information on how to minimize your personal liability while closing your business organisation.

Special Rules for Leases

Back rent is treated like any other unsecured debt, just you are subject to streamlined eviction procedures if you lot don't pay. If you're behind on residential rent payments, the landlord is likely to start an eviction lawsuit against you within a few weeks. Unless the building is found to exist uninhabitable (substandard or unsafe), chances are y'all'll exist ordered to vacate within about six weeks. A commercial eviction is quicker than a residential eviction—it can be over in just a few weeks.

Y'all tin try to negotiate with the landlord to make up unpaid rent over the next several months, but exercise this before the landlord files an eviction lawsuit. Your landlord may be likely to negotiate if lots of properties are vacant in your area. If you can show that, while your business organisation is brusk on cash, you lot accept a believable long-term survival plan, you may be able to go a new lease with lower hire. Your chances volition meliorate if you tin can peradventure bear witness that y'all or a private lender will invest new capital letter in the business organisation if the lease and other obligations are reduced. (For more on negotiating your rent down, see our article on ways to cut costs.)

If you take to motility out when yous have time remaining on a lease—residential or commercial—your landlord tin can sue you for the remaining months' rent. However, in most states the landlord is obligated to try to rerent the infinite starting time to minimize the loss. This is chosen "mitigating the damages." For more than information, run across Nolo's article on how to become out of a lease early, with the fewest consequences.

Find a new tenant yourself. A landlord who expects to eventually collect from y'all all of the rent you owe under the broken lease may move slowly to observe a new tenant. If y'all aid find a new tenant and get the infinite filled faster, you'll limit your future liability under the lease.

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Source: https://www.nolo.com/legal-encyclopedia/free-books/small-business-book/chapter4-4.html

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