If I file bankruptcy will I be responsible for any deficiency?

UPDATED: May 20, 2012

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If I file bankruptcy will I be responsible for any deficiency?

I co-signed a mortgage for a “friend”. I live out of the state and have never even seen the property. The problem is that my friend stopped making the payments and I didn’t know anything about it until I checked my credit report. My credit score tanked because of 30 and 60 day late payments. I want to file bankruptcy to get rid of the obligation, I have exhausted my savings saving the house and what’s left of my credit rating. Since I live in another state, if I file bankruptcy here will I be on the hook for any deficiency in the matter?

Asked on May 20, 2012 under Bankruptcy Law, California


Jason Ostendorf / Law Ofice of Jason Ostendorf

Answered 10 years ago | Contributor

The answer is yes and no.  In terms of money, if the debt is discharged, you will not have to pay any deficiency in the event of foreclosure.  So, "no".  However, the bank will still be able to foreclose on the home, so in that limited sense, "yes".  In sum, you will not have to pay any money toward any deficiency even though the home will be taken away.

Before filing for bankruptcy, you should speak with some bankruptcy lawyers to make sure you are eligible for a full discharge of the debt.  Unfortunately, I cannot act as your attorney since I am a Maryland lawyer and you live in a state in which I am not licensed.

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