QUESTION
Can we file for bankruptcy to discharge the debt on a house?
Asked on Jul 25th, 2012 on Bankruptcy - New Jersey
More details to this question:
My huband and I were foreclosed on (an upside down mortgage) in Pennsylvania. We now live in Texas, and recently received a notice of pending sheriff's sale. We don't want the house, the property is greatly encumbered by a water agreement that was put into effect many many moons ago, before my husband and I inherited it. We are living on a very limited income. I am currently going to school online, and he is permanently disabled, receiving only $850. SSD monthly. The total amount due is over $162K. Any information would be greatly appreciated.
16 ANSWERS
Chapter 7 Bankruptcy Attorney serving Clinton, MS
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Timothy Kevin Byrne Attorney at Law
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Yes.
Answered on May 29th, 2013 at 12:16 AM
Bankruptcy Law Attorney serving Huntington Woods, MI
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Austin Hirschhorn, P.C.
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You have to reside in the state where you file for at least 90 days prior to the filing so if you have lived in Texas for at least 90 days that is the place where you would have to file.
A bankruptcy filing can discharge a debt that is owed on a house. You can research the bankruptcy filing requirements on the internet.
Married persons can file a joint petition and there is only one filing fee to be paid. Even though the law does not require you to hire a lawyer to represent you in filing for bankruptcy because of the complex Bankruptcy Code and filing requirements I always recommend that clients hire a lawyer that practices bankruptcy law to represent them.
I would suggest that you consult with several who will probably give you a free initial consultation before you make a selection and try to select someone that you are comfortable with. If you have trusted friends or relatives where you live you might ask them for a recommendation. Many Bar Associations have lawyer reference services and they will try to match people up with lawyers who specialize in the area that people need help with.
Answered on Aug 15th, 2012 at 10:08 AM
Bankruptcy Attorney serving Concord, CA
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William Rubendall Attorney at Law
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You need to consult with a Pennsylvania real estate attorney as to whether the lender can get a deficiency after the sale. If they can you can use bankruptcy to discharge the debt. If they can't you don't need a bankruptcy.
Answered on Aug 15th, 2012 at 10:08 AM
Daniel James Wilson
If the lender pursues you for a deficiency you can file a Ch 7 and discharge the debt, but I wouldn't do it until they try to collect.
Answered on Aug 15th, 2012 at 10:07 AM
Litigation Attorney serving San Antonio, TX
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Graves Law Firm
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Yes, any deficiency (debt left after foreclosure sale proceeds are applied to the mortgage debt) is treated like an ordinary unsecured debt and can be discharged in bankruptcy. See a bankruptcy lawyer.
Answered on Aug 15th, 2012 at 10:07 AM
You can discharge the debt in a bankruptcy by not affirming the mortgage. This would also allow you to discharge other debt such as medical bills that you cannot pay.
If you don't have significant other debt, you could contact the lender regarding the possibility of getting rid of the debt through a short sale or a deed in lieu of foreclosure (wherein you agree to turn over the property and the lender does not have the expense of foreclosure), or you could just let the lender foreclose.
At such time, try to negotiate an agreement with the lender that you will not be pursued for the difference in what you owe on the property and the amount the lender receives from eventually selling it (the deficiency).
In the event that you are pursued for the deficiency, you may want to consider bankruptcy.
If the lender forgives the deficiency, the canceled amount may be taxable. Currently, under the Debt Relief Act, you do not have to pay taxes on the forgiven debt.
However, the Act expires at the end of this year, unless it is renewed by Congress.
Answered on Aug 15th, 2012 at 10:06 AM
Burton J. Green
The mortgage loan debt is totally dischargeable in a bk. It will be discharged when you file for bankruptcy.
Answered on Aug 15th, 2012 at 10:05 AM
Glen Edward Ashman
You need to talk to a lawyer to see if you even face a deficiency, which affects the decision.
Answered on Aug 15th, 2012 at 10:04 AM
Bankruptcy Attorney serving Oakdale, CA
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Law Office of Todd Whiteley
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Assuming you don't have other assets which would not be able to be exempted in the bankruptcy estate, then your income scenario fits bankruptcy chapter 7 protection perfectly. You list the home mortgage/debt as a secured claim and express the intent to surrender the house (and thereby convert the secured debt to unsecured debt). Unsecured debt is dischargeable through bankruptcy, and any 1st, 2nd or subsequent mortgage debts would be discharged through the bankruptcy.
Answered on Aug 15th, 2012 at 7:33 AM
Immigration Attorney serving Arlington, TX
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Law Office of Pho Ethan Tran, PLLC
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Yes. Filing for bankruptcy will include any debts, including your mortgage.
Answered on Aug 15th, 2012 at 12:40 AM
Yes, you can, but you may not need to do so. Check with a Pennsylvania lawyer about whether that state permits deficiency judgements after foreclosure. If they do, bankruptcy is probably your best bet. However, your husband's disability can't be touched and at the moment you are not earning an income. It would be quite hard to collect money from you, so before you spend the money on a bankruptcy, figure out if you really need to file.
Answered on Aug 15th, 2012 at 12:39 AM
General Practice Attorney serving Crystal Lake, IL
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Bruning & Associates, P.C.
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Personal liability on mortgage debt can be discharged in a bankruptcy; it is a good idea to ensure that all the parties to the foreclosure proceedings receive notice of the bankruptcy in order to avoid future problems arising from the property (examples: home owner associations, mortgage lenders, any other lien holders, etc). A bankruptcy attorney would be able to help you identify all of those parties and ensure they get notice. You will still receive notifications about the foreclosure proceedings, but the bankruptcy will ensure that you will not be personally liable if the bank sells the house for less than the loan on it is worth, so you would avoid what's called a "deficiency judgment."
Answered on Aug 14th, 2012 at 9:09 PM
Criminal Law Attorney serving Fremont, CA
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Steven J. Alpers, A Professional Corporation
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Talk to a Texas attorney, in California the mortgage company can only foreclose on the property and sell the house to get its money.
Answered on Aug 14th, 2012 at 9:04 PM
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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Yes. If you qualify.
Answered on Aug 14th, 2012 at 9:00 PM
Criminal Defense Attorney serving Deltona, FL
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R. Jason de Groot, P.A.
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You need to ask this question to a Texas bankruptcy attorney, perhaps one in PA too. In Florida a discharge will wipe out the debt on the house, it probably will in other states as well.
Answered on Aug 14th, 2012 at 8:51 PM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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Yes, you can file for bankruptcy (not enough info to say chapter 7 or 13), and you can walk away from the property. It is called surrenderring. If the trustee does not take it, you can call the bank and give them a deed in lieu once you have been discharged of your personal obligation.
Answered on Aug 10th, 2012 at 1:41 PM