If I foreclose on my house voluntarily, I owe more than it is worth, will I be billed the difference if the ba

Question

if the bank loses money when they auction it or sell it. Also what if I file bankruptcy then foreclose? I want a fresh start, what is the best way? I know my credit will be ruined, but for how long exactly and is credit even that big of a deal? I'm 27 and hope to be back on track by 30 or 31, is this possible? Any suggestions or comments or advice please?

Answer 1

They could potentially go after your other assets. Don't ignore the fees involved in a foreclosure or selling your home as well.

I suggest renting out a room AND getting a second job. At 27 you should have plenty of energy to work 2 jobs.

Credit is extremely important. It will be on your credit report for 7 years yet will must always answer the "have you ever filed for bankruptcy or had a foreclosure" honestly for the rest of your life.

Your credit score will drop significantly over the next 7 years. Then you can start rebuilding it, which would probably take several more years.

Good luck,

Answer 2

Bankruptcy is a last resort. It means that you have tried every possible way to pay off your debts and have hit rock bottom. Afterall, credit is your promise to pay someone for a good or service. They take your word for it when you enter into a contract. You are essentially breaking your word. Would you go back to a car mechanic that told you the brakes were fixed, and you winded-up in a accident? Maybe. Would you go back to that same mechanic if this had happened two times? three times? four times? every time? Of course not. By declaring bankruptcy, you look that same way to businesses.

That being said: Yes, the bank will come after you for the difference. Not only that, they will unload this house ASAP for whaterever they can get. Afterall, they are bank not a realtor. The house is an expense just sitting there. They can sue you and garnish your wages, clean out any bank accounts, take you stuff,etc...It's real unpleasent.

First: Explore your situation throughly. Do you have car payments? Cable payments? Putting money into retirement funds? Paying for whole life insurance? Only one job? Eating out a lot? These are all areas where you can make/save money. Sell the car if you have payments. Get some "get me to work and back home" used car. No more cable tv. Stop the retirement funding until you clean up this mess. Get term insurance. Get another job, or work overtime. Learn to cook. Cooking at home is much cheaper and healthier.

Next: Get on a budget. You should know where every penny is going. In fact, you should plan where every penny is going before you even get it.

Sell the house yourself rather than allow the bank to foreclose. You should be able to get a much better price. Remember, every dollar more you get for the house is a dollar you don't have to pay back to the bank.

Clearly, I don't know your situation. You may have just came out of a 3 month coma and found yourself in this mess. Or, you may just not been paying attention to your finances. Either way, where you go from here is mainly up to you. Bankruptcy may be your only hope. You best bet may be to seek out a finiancial counselor. It'll cost you a little, but they can help put you back on the right track. Just be sure to tell them that bankruptcy is reserved as a last resort. You are a man of your word.

Answer 3

You will have a foreclosure in the full amount of the mortgage on the credit report if the bank forecloses and takes the home. This will take a minimum of 4 years to recover from. Most lenders will consider you a risk for the first 4 years.

You may want to consider short selling the home. This is where the lender would approve the home to be sold at the value it brings and 1099 the difference to you as income. You prevent a foreclosure and save your record.

Here is some info that should help:

Answer 4

Yes if you foreclose you will owe the difference. You need to find yourself a foreclosure Realtor. They will be able to help you with a Short sale on your house, that is if you are not to far along. But you are a candidate if you have files the Lis Pendence. A short sale is a negotiated settlement with the lender agreeing to accept less then the amount owed as a payoff on the loan. You need to speak to a knowledgeable real estate agent that deals in foreclosures, they do all the work for you because even though you will not make any money off of this sale, the bank pays them a commission to the agent. Look into it... Good luck

Answer 5

If the bank gets less than you owe, they will come after you for the difference plus the fees and costs. This will include taking personal posessions, garnishing your wages, and any other remedies the court can provide. This will remain on your credit report as long as the debt is actively owed. Once its written off it will stay for up to 10 years.

If you qualify under the new rules for Ch 7 Bankruptcy, you will be completely relieved of this debt. Bankruptcy will remain on your credit for 7 years.

If you file Ch 13 Bankruptcy, the judge may or may not make you pay some or all of the difference in your bankruptcy payments.

I don't know your situation. But if your debt load is too high, file bankruptcy and start over. If you wait until later in life, it will be too hard to recover. In three years, your credit should start to look better to creditors. They know you will be unable to file bankruptcy again for seven years.