QUESTION
Should my relative walk away from her mortgage or file bankruptcy?
Asked on Sep 16th, 2015 on Bankruptcy - Kentucky
More details to this question:
A relative’s only income is a small amount of SS, is in bad health, currently in hospital, and can no longer afford to pay her mortgage. The home is in extremely bad condition, probably not worth the amount of mortgage. What happens if she stops making monthly payments? Is there a penalty? She wants to move out of the house into affordable housing. Chose bankruptcy but does not want to declare BK?
6 ANSWERS
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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Since she has little income and no assets, just walk away from the mortgage. If she gets sued and they try to garnish her bank account, then she can file bankruptcy.
Answered on Sep 21st, 2015 at 4:02 AM
2 Awards
You could check with the mortgage holder if they are willing to do a deed in lieu of foreclosure.
Answered on Sep 16th, 2015 at 6:56 PM
She can stop making the payments and see if the bank even ask for a deficiency judgment bankruptcy usually he's only need it if you have other date as well.
Answered on Sep 16th, 2015 at 2:31 PM
I would be calling a local realtor about trying to get this property sold. Lots of buyers ready to purchase distressed properties to fix up and flip, and if she owes more than the property is worth, a short sale can be the answer. Typically, the mortgage company would not pursue someone for additional payment in a short sale situation. But you can cross that bridge when and if you come to it.
Answered on Sep 16th, 2015 at 2:23 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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She should counsel with an attorney with the details to determine her options.
Answered on Sep 16th, 2015 at 1:50 PM
Real Estate Attorney serving Florence, KY
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Linda S. Novakov & Associates, PLLC
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If there are no additional liens on the property, she may have the option of deeding the property back to the lender, in lieu of a foreclosure. There is a process, financial documentation must be provided, but she may qualify to deed the property to the lender and be released from the debt in exchange. Contact the loss mitigation department at the mortgage holder. If you want to be able to speak with them directly, she will have to authorize you to do so, either by being on the phone with you or in writing, which you will need to fax to the lender.
Answered on Sep 16th, 2015 at 1:49 PM