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mortgage question

We owe 90000 on our house, but because of the market now, it is worth less. If i declare bankrupcty and let the bank take the house, and the bank sells it for 70000, am I responsible to repay 20000? if so how so people normally do this? if it takes me 4 years to pay back the 20000, does this mean that i will not be discharged untill this is fully paid?

Posted from: Ontario

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One Response to “mortgage question”

Barton Goth – Goth & Company Inc. -Trustee in Bankruptcy said...

As long as the property is defaulted on and returned to the bank prior to filing a bankruptcy then the shortfall (20k) is cleared by the bankruptcy.

However, in bankruptcy you have no requirement to pay back the 20,0000, so there is no paying of this back and it really doesn’t effect the duration of your bankruptcy.

What you need to do is to contact a local trustee, they will sit down and review with you how the bankruptcy process works. They will discuss the standard duties you will have (i.e. cost, counseling sessions, income and expense reporting) and you will then have a much better handle on how a bankruptcy will impact your situation.