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A friend who is upside down on her mortgage told me she plans to just walk away from her house a few months after stopping payment. (Just before she would be formally evicted.)
Yes her credit rating would crash, but it is already low. I told her that her State allows deficency judgements and the bank may go after her for the difference between what she owes on her mortgage and the value of the home. (About $100k). She says that rarely happens.
If she owed $100K on her credit cards they would likely sue and eventually take money out of her bank accounts and paychecks, why would or should it be any different for for running out on your mortgage?
What do you think, will the bank that owns her mortgage go after her after the foreclosure?
Your mileage may vary, but an IRS form 982 would likely help to contravtert the 1099C form that the mortgage company might send for their "loss." I'm not a CPA, she should check laws in her state, etc.
Many people once sued for the deficiency, declare bk.
Yep.
I've known two people who have done this. They both lived in their houses for a couple years while the foreclosure process drug along. One claimed bank employees encouraged him to continue living there because at least the pipes didn't freeze and no one was stealing the furnace.
After the foreclosures, the bank went after both of them for the difference. They both declared bankruptcy and went on with their lives.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Quote:
Originally Posted by 2bindenver
Many people once sued for the deficiency, declare bk.
Yes, the few I know that did this filed bankruptcy. One in particular just sold her beater car for $500 to avoid a $6000 repair, and is looking for a new one in the $2,000 range since she has no credit to get a loan.
Without bankruptcy, in our state and many others the lender can get a judgement in court and attach wages or bank accounts to get their money back.
Yes, the few I know that did this filed bankruptcy. One in particular just sold her beater car for $500 to avoid a $6000 repair, and is looking for a new one in the $2,000 range since she has no credit to get a loan.
Without bankruptcy, in our state and many others the lender can get a judgement in court and attach wages or bank accounts to get their money back.
Chapter 13 bankruptcy will remain on your credit report for 7 years. Chapter 7 bankruptcy will remain for 10 years.
Some make it through this time by having an unmarried partner who handles the financial affairs for the couple.
Only a hand full of states allow deficiency judgement, its why you pay PMI, its insurance so the bank is covered if you have less than 20% down. If you have to pay PMI and they still sue you I would get a lawyer and say thats what the insurance is for if you are in a state that allows it.
Personally I would not live in such a state, its basicly the state govt siding with big banks. I am surpirsed state govts still allow "at will" but thats another issue.
Because you loose your job OR your area turns into a dangerous crap hole and you have to move.
Quote:
Originally Posted by welby1205
There is loss mitigation help, why would you just walk away?
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