In order to avoid any penalties, shouldI file for bankruptcy after walking away from my mortgage?

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In order to avoid any penalties, shouldI file for bankruptcy after walking away from my mortgage?

I am currently getting ready to walk away from my mortgage (within less than a month). Should I file for bankruptcy to prevent backlashing from the bank?

Asked on June 20, 2011 under Bankruptcy Law, Michigan

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

You need to find out if you live in a deficiency or anti-deficiency state. Second, bankruptcy is not considered a cure all and if the court determines you do not qualify or the reason or timing of your bankruptcy is questionable, it could theoretically kick out and dismiss your filing. Consider now that with short sales, the lender cannot seek those monies from you but you need to discuss those options with your lender. Have you considered a modification (either in house with the lender or servicer or a HAMP modification)? If you qualify, you could save your home. Consider talking to your lender or servicer and stay on top of the application process. Keep diligent and strict and detailed records. You could file a complaint with your state's department of banking if the lender or servicer drags its feet.


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