Home is in foreclosure and have debt should you declare bankruptcy?

Answer 1

I can't give legal advice on here, but generally the answer to that question is "No." Frequently the bank will bid on the home itself at the foreclosure sale to be sure no one steals it for $1, leaving it owed a huge balance that it knows the buyer will file bankruptcy on. So, it bids whatever it is owed and if someone bids more, great - the bank gets paid. If no one outbids the bank, then it gives the house to a realtor and does the best it can. But, the practical effect for the buyer is that the bank received everything it was owed during the sale, even though it was from itself, so there is no deficiency balance owed by the buyer. So, unless your bank opts not to bid at the foreclosure sale, or if you have a second mortgage, then usually it is a good idea to wait and see if the bank ever contacts you with a deficiency balance. If it doesn't, great - you just pay the $4,000 and go on with your life. If it does, file bankruptcy then if necessary. Many people call the sheriff's department (or whoeever does the sale where you are) and asks who bought the house and for how much. If the purchase price was the same as the foreclosure judgment, no worries usually. Please note that nothing in this posting or in any other posting constitutes legal advice; this is simply my understanding of the facts and law, which I do not warrant, and I am not suggesting any course of action or inaction to any person. Speak to a lawyer for specific advice. If you have any questions, please refer to a lawyer in your jurisdiction. Thanks!