Folks who have lost their job or otherwise fallen on hard times sometimes lack the money to make their home loan payments. Too, the value of the residence may have fallen, leaving the home owner under water with a loan balance that far exceeds the value of the property. In situations like these, the owner may consider walking away from the property and defaulting on the loan.
Does the bank/lender sell the home at the foreclosure sale and mark the loan Paid In Full so the borrower can move on and start afresh? Not hardly.
Typically, there is a balance due from the borrowers after the sale that is called a deficiency. The lender can sue the borrowers and garnish their wages or otherwise try to collect the deficiency. At the least, the default shows up on a credit report and makes it difficult or impossible for the borrowers to get loans in the future so long as the deficiency remains on their record.
Some folks qualify to file bankruptcy, often under Chapter 7 to wipe out debts and start over or under Chapter 13 where a payment plan is ordered requiring the debtor/borrower to pay part of the debts over several years.
For those borrowers who cannot qualify for relief in bankruptcy court, walking away from a home loan may be a nightmare with no end in sight. Don’t make the mistake of going that route without seeing if there are any other options.
Kurt H. King
Law Office of Kurt H. King, 20 E. Franklin, Liberty, Clay County, Missouri 64068
816.781.6000
Bankruptcy, Litigation, Personal Injury, Missouri Workers’ Compensation, Family Law
The Law Office of Kurt H King 
Leave a Reply