- July 31, 2008 at 5:54 pm #260978
It is true that the Mortgage company can sue you if the house (after foreclosure) does not sell for enough to pay off the balance of the loan. If you file bankruptcy first, then they can’t sue you for the difference.
I know because we are in the middle of foreclosure right now. The mortgage company ( countrywide) filed the forclosure papers requesting a deficiency judgement against us.
If deficiency were granted by the court, we would have to balance of what was due after the sell the house at auction on the courhouse steps.
Because we filed bankruptcy and were granted a discharge of all our debts, we were able to file legal response as to why we cannot be sued. If it were not for the bankruptcy, they would be coming after us.
Sent: Friday, August 01, 2008 7:02 AM
Subject: Re: Budget101.com : Before Our Credit is ruined
i lost my home a few years ago through foreclosure after i became disabled and my income dropped to a fraction of what it had been previously. also, at the time, i owed an astronomical amount in doctor and hospital bills plus $37,000 in credit card debt which I could no longer continue paying. I was not even in a position where I could take advantage of their offer to settle the accounts for 1/3 of what I actually owed them.
In my case, nothing damaged my credit as badly as the foreclosure did.
I’ve since talked with several people who filed bankruptcy and were able to get new credit cards or other loans within 6 months afterwards so I’m inclined to think a bankruptcy doesn’t even trash your credit as badly as a home foreclosure. So in my opinion, if you’re going to allow your house to go into foreclosure, you may as well default on your credit cards too since struggling to make the payments won’t save your credit.
But there are a few things to take into consideration before you make any definite decisions though. The mortgage company will sell your house for whatever they can get in a quick sell and if that amount doesn’t cover the payoff, they can sue you for the difference. The credit card companies will probably sue you as well and once a judgment has been put against you, the creditors will garnish wages, levy against any assets you may own and freeze your bank account.
This is what happened to me. I had no income of any kind during the 6 months it took to start receiving my disability and that was ROUGH enough but was nothing compared to the hardships I endued when my bank account got frozen without any warning. My disability payment was direct deposited into my account and I was not allowed to withdraw any of it.
I had less than $4 cash in my pocket, car’s gas tank on empty, middle of winter and ended up homeless from December until the end of April. I was able to obtain a lawyer through Legal Aid to get my bank account “unfrozen” but it took several months and other resources I qualified for didn’t come through until much later. I’m living in government assisted housing now but I was on a waiting list for 21 months before that came through.
Just because there’s resources available in your city doesn’t mean you’re going to get help immediately when you need it so check on those things before you make any definite decisions about anything. Protect yourself as best you can by being well informed about all the possibilities of what could happen even though you’re sure it can’t or won’t.
It might not be a bad idea to set up a free consultation with a good bankruptcy lawyer and see if there might be a particular chapter of bankruptcy that might allow you some debt relief and be a better option for you. I don’t have any personal experience with bankruptcy but I do know it won’t wipe out any judgments that were put against you prior to filing.
Having said all this, I take it you aren’t able to sell your house for what you owe against it? Or you don’t have an assumable loan on it where someone with good credit could have the loan transferred into their name? Have you talked to your mortgage company and explained your financial situation to them?
They might be able to offer you some alternative solutions.
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