What can I do if I cannot afford my house after bankruptcy? 28 Answers as of June 04, 2014

I had a bankruptcy in 2010 and discharged in 2011. I kept my house and now I cannot afford it. Can I leave the house to the bank still? It was listed in the bankruptcy but I was never late and kept up on the payments. It has drained all my savings and I have nothing left to sell to keep up on the payments. My mortgage statement says from them this is for information only, and we are not trying to collect a debt because this mortgage was assigned in a bankruptcy case.

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David R. Fondren, Attorney at Law
David R. Fondren, Attorney at Law | David R. Fondren
The question is did you sign a reaffirmation agreement or not. Check with your attorney if you cannot remember or find your copy. If you did not, you discharged your personal liability for the debt and do not owe it and do not have to pay it. The loan company does have a valid lien on the real property and will foreclosure if you stop paying. You will have to make arrangements to move out at some point before they file a landlord/tenant case of unlawful de against you.
Answer Applies to: Missouri
Replied: 6/4/2014
Law Office of Marlin Branstetter
Law Office of Marlin Branstetter | Marlin Branstetter
In California, if you do not make the mortgage payments, the bank may foreclose on the house or sue you for the outstanding debt. They cannot do both. In most instances the choose to foreclose. In that case you would owe nothing on the house but the bank would take possession.
Answer Applies to: California
Replied: 5/2/2014
The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
You can try to do a short sale rather then leave the house. Although some attorneys would say you can just leave, it is bad for the neighborhood, vandals, kids can get hurt, etc, so the better way is to hire a realtor to do a short sale, an attorney to negotiate with the bank and get rid of the house properly. The bank will pay your realtor fees, your legal fees and your transfer costs and sometimes will even give you money for moving expenses.
Answer Applies to: New York
Replied: 5/2/2014
Law Office of Susan G. Taylor
Law Office of Susan G. Taylor | Susan G. Taylor
Sounds like you did not reaffirm the mortgage & can leave anytime, without having a foreclosure on your record or suffering a deficiency judgment. Ask your bankruptcy lawyer, or try to take a look at your docket sheet.
Answer Applies to: Texas
Replied: 5/2/2014
Stephens Gourley & Bywater | David A. Stephens
If the debt was discharged, you can simply stop paying. The bank will foreclose, but it will not be able to pursue a deficiency for its losses.
Answer Applies to: Nevada
Replied: 5/1/2014
    GARCIA & GONZALES, P.C.
    GARCIA & GONZALES, P.C. | Richard N. Gonzales
    Assuming you did not sign a Reaffirmation Agreement, you can walk away from the house. You may want to consider selling the house on a "short sale" basis, assuming there is no equity in the property. In any case, talk to a Realtor before you simply walk away. I would just want to be sure there is no equity for you in the house. But the bottom line is, yes, you can walk away from the home.
    Answer Applies to: Colorado
    Replied: 5/1/2014
    James T. Weiner & Associates, P.C.
    James T. Weiner & Associates, P.C. | James T. Weiner
    Your bankruptcy eliminated your personal liability on the note for the house.. So the question is: Is the house worth more than what is due on the mortgage? If it is worth more.. sell it, pay off the mortgage and pocket the difference if it is worth less than the mortgage call the bank and ask if they want the house back.. you will not be liable for any deficiency.
    Answer Applies to: Michigan
    Replied: 5/1/2014
    Tokarska Law Center
    Tokarska Law Center | Kathryn U. Tokarska
    I'm sorry to hear this. Yes, as long as the debt was not reaffirmed and you haven't refinanced since you filed the bankruptcy (note that loan modification and refinancing are two different things) you can walk away without owing money. Letting go of a home is often a difficult decision to make. Whether it's' a wise choice for you I can't say because I don't know anything more your situation like: how much you owe, what is your income, how much the house is worth, have you modified your loan and if you tried but was rejected have your circumstances changed in a way that now makes a loan modification possible, is refinancing an option and a good idea, would chapter 13 help? If you'd like to stay in the property be sure to explore all of your options before making your decision to leave it.
    Answer Applies to: California
    Replied: 5/1/2014
    Hicks, Massey & Gardner, LLP
    Hicks, Massey & Gardner, LLP | Robert M. Gardner, Jr.
    From what your mortgage company is sending you, it sounds like you never reaffirmed the mortgage. If you did not, then you do not owe the mortgage company any money personally, and they just retained a lien against the home. This means that you can walk away with no personal financial obligation, although the mortgage company will still have to go through a foreclosure process and send you notices under state law. Also, many mortgage companies will not lend you money on a new house until at least a year after the foreclosure. Ask your bankruptcy attorney about whether or not the debt was reaffirmed to be sure.
    Answer Applies to: Georgia
    Replied: 5/1/2014
    Stacy Joel Safion, Esq.
    Stacy Joel Safion, Esq. | Stacy Joel Safion
    I would suggest short selling the property and not walking away from it.
    Answer Applies to: California
    Replied: 5/1/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    You can walk away from it: BUT it may take a long to foreclose. So stay in it till they foreclose. If you leave you could be hit with code violations for trash and letting the yard go.
    Answer Applies to: California
    Replied: 5/1/2014
    Lynch Law Offices, P.C. | Roseanne N. Lynch
    You don't have to pay the debt associated with the house but you need to give the house up in some way. The Bank may not just "take it back". You may have to list it and try to sell it, I would guess it is a short sale. You should speak with an attorney that is familiar with Bankruptcy, Foreclosure and Short Sales to determine what options you may have in this situation.
    Answer Applies to: Illinois
    Replied: 5/1/2014
    Charles Schneider, P.C.
    Charles Schneider, P.C. | Charles J. Schneider
    If you did not reaffirm the mortgage debt then you should simply be able to walk away from it.
    Answer Applies to: Michigan
    Replied: 5/1/2014
    Hayward, Parker, O'Leary & Pinsky, Esqs.
    Hayward, Parker, O'Leary & Pinsky, Esqs. | Michael O'Leary
    As long as you did not reaffirm the mortgage debt in your bankruptcy case, the debt owed on the mortgage note is discharged in bankruptcy. The bank can foreclose and sell the house at auction, but you will have no liability for any deficiency if the bank is not made whole by the proceeds of the auction sale. However, you still own the house until something happens that causes a change in ownership, such as a foreclosure sale, short sale, deed in lieu of foreclosure, etc. The bankruptcy discharge did nothing to divest you of your ownership interest in the property. While you still own it you should keep the property insured for liability purposes, because if someone falls on the property and breaks their neck it is the property owner (i.e., you) who would get sued, not the bank who simply holds a mortgage on it.
    Answer Applies to: New York
    Replied: 5/1/2014
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    I would check with the attorney who did your bankruptcy, but it sounds like you didn't reaffirm your mortgage. Which is why the mortgage company is saying the stuff they are sending you is informational only. If that is true you can walk away anytime and the mortgage company cannot go after you for any deficiency.
    Answer Applies to: Michigan
    Replied: 5/1/2014
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    From the sounds of it, you did not sign a reaffirmation agreement. If that is true, then you are free to walk away from the property at any time. Keep in mind that as long as you are the owner of title (until a sale or foreclosure takes place) you will remain responsible for code compliance (mowing the lawn), payment of any HOA fees that are due, and for any injuries that may happen on the property due to negligence. Also keep in mind that you may be able to live there "rent free" for a while until the lender moves ahead with a foreclosure if you are unable to sell the home for enough to pay off the lien.
    Answer Applies to: Colorado
    Replied: 5/1/2014
    Garner Law Office
    Garner Law Office | Daniel Garner
    Yes, if you did not reaffirm the mortgage debt, you can surrender the house to the bank and they are not allowed to pursue you personally for any debt that might remain after they auction off the house.
    Answer Applies to: Oregon
    Replied: 4/30/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    Your best bet would be to try to sell the house, even if you take a loss on it with a "short sale." A foreclosure is very damaging to your credit, and because of your prior bankruptcy, you do not have to pay any taxes on a short sale.
    Answer Applies to: Nevada
    Replied: 4/30/2014
    Law Offices of Eric W. I. Anglin
    Law Offices of Eric W. I. Anglin | Eric W. I. Anglin
    You need to reach out to the lender and see what your options are under their loss mitigation: loan modification, short sale, deed in lieu of foreclosure, or foreclosure. If you did not reaffirm the mortgage debt during your bankruptcy, then you can walk away however you might be responsible for property taxes, insurance, hoa dues, etc. until it is sold. A foreclosure may damage your credit score again so be prepared for that you may not be able to obtain financing for a future home for a few years.
    Answer Applies to: Indiana
    Replied: 4/30/2014
    EDWARD P RUSSELL | EDWARD P RUSSELL
    Unless you signed a reaffirmation agreement in the bankruptcy process the mortgage debt along with all other debt would have been discharged in the bankruptcy and you can walk away from the house with no obligation.
    Answer Applies to: Minnesota
    Replied: 4/30/2014
    Steele, George, Schofield & Ramos, LLP
    Steele, George, Schofield & Ramos, LLP | Alan E. Ramos
    It appears from what you have stated that the debt for the home loan has been discharged in your Chapter 7. Assuming that you did not reaffirm the debt, you can let the property go into foreclosure, as you have no personal liability for the home loan. However, you may want to live in the house through the foreclosure process. You should also be aware that you continue to be liable for any injury on the property and any accrued, post-filing (after Chapter 7 (homeowner's association assessments. You should continue to maintain your liability insurance on the property until such time as you are no longer on title.
    Answer Applies to: California
    Replied: 4/30/2014
    John Ceci PLLC
    John Ceci PLLC | John Ceci
    Your personal liability on the mortgage is discharged. You don't have to pay it but if you don't, at some point they will begin the foreclosure process and evict you. That can take time but eventually it will happen.
    Answer Applies to: Michigan
    Replied: 4/30/2014
    Law Office of Andrellos Mitchell
    Law Office of Andrellos Mitchell | Andrellos Mitchell
    Well that's odd. Bankruptcy usually frees up income so a debtor can pay their bills. You need to met with a professional to get advice in person, not over the internet.
    Answer Applies to: District of Columbia
    Replied: 4/30/2014
    Portland Bankruptcy Law Group
    Portland Bankruptcy Law Group | Christopher J. Kane
    If you filed bankruptcy and received a discharge, and you owed on the mortgage at the time you filed the bankruptcy, your liability on that mortgage has been discharged. That means you are no longer liable for that obligation, and if you default on the payments the lender's only recourse is to foreclose on the collateral, the property. Or you can sign a deed in lieu of foreclosure and just give the house to the lender.
    Answer Applies to: Oregon
    Replied: 4/30/2014
    Edelman, Combs, Latturner & Goodwin, LLC | Daniel A. Edelman
    It sounds like your personal liability was discharged and later payments were to prevent the bank from enforcing its lien, which continues post-bankruptcy. You can surrender the property, but you need to make sure that the bank actually takes title and relieves you of liability for taxes, assessments, insurance, tort liability (someone injures himself on your property). You could also cease payments and let the bank foreclose (subject to same caveat, there are a lot of uncompleted foreclosures), or make an effort to sell the property, in which case the bank is entitled to the proceeds.
    Answer Applies to: Illinois
    Replied: 4/30/2014
    Law Office of Andrew Oostdyk
    Law Office of Andrew Oostdyk | Andrew Oostdyk
    If the mortgage was not reaffirmed (A Reaffirmation Agreement that is filed with the Bankruptcy Court stating your intention to keep the property and continue to make the payments), then it was technically discharged in the Bankruptcy and you are not liable for any deficiency if you walk away from the house. Be sure to communicate with the mortgage company and let them know if you intend to leave the house, so the mortgage company can winterize the property and assume possession of the house (this helps protect you from any liability if the house is damaged after you move out).
    Answer Applies to: Texas
    Replied: 4/30/2014
    Moore Taylor Law Firm, P.A.
    Moore Taylor Law Firm, P.A. | Jane Downey
    You could think about leaving or asking for a loan modification.
    Answer Applies to: South Carolina
    Replied: 4/30/2014
    LAW OFFICES OF CRAIG BURNETT | Craig Alan Burnett
    Walk away. You will not be liable to the bank for any amount for two reasons your bankruptcy discharged the debt, and California has an anti-deficiency law that prevents a foreclosing lender from pursuing you for any deficiency.
    Answer Applies to: California
    Replied: 4/30/2014
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