Can I hand over my mortgage to the Lender and walk away?
September 23rd, 2015 by Questions
I am 5-years into my personal bankruptcy and, while I was able to keep my home at the time of Discharge due to low equity, I am now faced with a massive home repair bill. On top of my monthly mortgage payment, I will be unable to keep up payment. As I am still in my bankruptcy can I hand over my mortgage to the Lender and walk away?
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September 23, 2015 at 6:21 am, Doug Stuive, CA | Trustee | CIRP said:
A – A personal bankruptcy discharges you from the debts that you had incurred as of the date of filing your assignment in bankruptcy. When you have a secured debt, such as a mortgage, you need to make the decision about continuing or stopping payments and surrendering the house to that creditor at the time you are signing the paperwork. If you choose to surrender your house to the mortgage company at the time you file, then any amount owing to the bank after they dispose of the property would be a debt that is included in your bankruptcy estate. However, if you choose to keep your home after filing your bankruptcy, you are reaffirming your mortgage contract with that company. Any default that occurs on your mortgage after that time would be your responsibility and cannot be discharged with the debts that you included in your bankruptcy.
I should also point out that once you receive a discharge certificate you are not considered to be in bankruptcy any longer. The bankruptcy is over as of your date of discharge. A record that you filed a bankruptcy does stay on your credit bureau report but that does not mean you are still considered bankrupt.