can I give house back to the bank? will i need to file for bankruptcy?
March 9th, 2010 by Questions
Separated, paid mortgage until now, but unable to continue thinking of bankrupt or surrender house back to the bank, do I still have to go bankrupt?
Posted from: Alberta
One Response to “can I give house back to the bank? will i need to file for bankruptcy?”
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March 10, 2010 at 10:14 am, Barton Goth - Goth & Company Inc. -Trustee in Bankruptcy said:
Whether or not you will have to file for bankruptcy is going to depend on how much the bank sells the foreclosed property for.
What will happen if you walk away is that the bank will foreclose, sell and out of the sale proceeds will first cover any costs (i.e. real estate and legal fees) and then apply the remainder to the outstanding mortgage. So what you can expect is that the amount that is applied to the mortgage won’t be sufficient to cover the entire balance and whatever is left you will be responsible to make sure it is paid if full. So if the house sells for a high price there may only be a small amount left owing and you may be able to make arrangements to pay it directly. However, if the amount is larger than you can handle you may be forced to consider the filing of a bankruptcy or a consumer proposal, as both of these will be able to deal with any mortgage shortfall that may result.