Can I walk away from my house without having to file for bankruptcy?
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Can I walk away from my house without having to file for bankruptcy?
Health issues have kept me from working for the past 1 1/2 years. I am looking to move in with family till I can resume working. I can no longer continue to pay for my house.
Asked on July 6, 2011 under Real Estate Law, Rhode Island
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
If you walk away, the following things will happen:
1) The house will be foreclosed upon;
2) You will have a default and foreclosure on your credit report or history; and
3) Rhode Island apparently allows deficiency judgments, so if the home, at foreclosure sale or auction, sells for less than the remaining balance of the mortgage, the bank *may* sue you for any amounts still not paid off by the home sale. (e.g. $200k mortgage; home bringins in $140k after allowable expenses; you could potentially be sued for $60k.) That's not to say the bank will do this, only that it has the right to do so in many circumstances.
You may wish to consider bankruptcy as an option, as it will protect you from a deficiency jugment if filed properly and won't hurt your credit much more than the default and foreclosure will.
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