Will I lose my car if it was on my mortgage papers and I default and go to foreclosure?

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Will I lose my car if it was on my mortgage papers and I default and go to foreclosure?

My husband and I are divorcing. Our home is for sale but will not be sold before we fall behind on payments. Neither of us can afford the home on our own, and I don’t even want the place. We placed our vehicles on the loan papers at signing. When we go under, will the bank take our cars even though their combined worth is nowhere near what we owe? Or should we just mail in the keys and walk away with our possessions and let it go to foreclosure? Not sure how that works… need advice on what to do here so that I can keep my car.

Asked on April 25, 2011 under Real Estate Law, Wisconsin

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

I am so sorry for your situation.  Let me understand you correctly: you listed your vehicles as collateral on the loan? One would really need to read your paperwork her to determine what is going on and what you need to do legally and if you can keep the cars in this instance.  As for the house, can you put it up for sale?  If the mortgage is more than the house is worth can you do a short sale (but you must get bank approval and you must make sure that they waive any deficiency, which is the remaining amount on the loan after the sale).  You can also negotiate a deed in lieu of foreclosure, which will allow you to deed the house over to the bank (again, have them waive the deficiency).  You can always try and negotiate for the cars.  Good luck to you. 


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