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Can't Afford Home After Bankruptcy

Question: What can I do if I cannot afford my house after bankruptcy? I had a bankruptcy in 2010 and discharged in 2011. I kept my house, but now I cannot afford it. Can I leave the house to the bank still? It was listed in the bankruptcy but I was never late and kept up on the payments. It has drained all my savings and I have nothing left to sell to keep up on the payments. My mortgage statement says from them this is for information only, and we are not trying to collect a debt because this loan was involved in a bankruptcy case.


Answer: It appears that your personal liability was discharged and later payments were to prevent the bank from enforcing its lien, which continues post-bankruptcy. You can surrender the property. However, the bank is not obligated to accept it. You need to make sure that the bank actually takes title to the property. Otherwise, you continue to be liable for taxes, homeowners’ association assessments, torts (damage liability if someone injures himself on your property), and other obligations associated with the property. You could also cease payments and let the bank foreclose (subject to same caveat, there are a lot of uncompleted foreclosures), or make an effort to sell the property to a third party, in which case the bank has to approve the sale (but cannot unreasonably refuse to do so) and is entitled to the proceeds.

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