Foreclosure
Question: I currently own a condo which is an investment property. The renters are leaving this month. The condo association has recently held a vote, where it was decided that renters would no longer be allowed. Current leases are allowed to run to completion, but this does not help me. I owe more money on this condo than what it is worth. There are other legal complications to messy to go into here. Anyhow, the option of just walking away from this property is looking better all the time. My question: what is the worst case scenario of what can happen if I just walk away and allow the bank to foreclose? Obviously my credit is destroyed, but can they sue me for the loan amount? Put a lean on the home that I live in? Garnish my wages? I owe more money on this condo than what it is worth. >My question: what is the worst case scenario of what can happen >if I just walk away and allow the bank to foreclose? >can they sue me for the loan amount? Put a lean on the home that I live in?
Answer: Sure, with a court’s permission. They’re entitled to collect. They may well be able to force its sale if you have substantial equity.
In general, the ways you can discharge a legal debt are very few:
1. pay the debt 2. negotiate some settlement 3. convince a court that the debt is not legal 4. take out bankruptcy and do what the bankruptcy court orders
You can’t just “walk away” unless the lender is unwilling to take steps to protect the lender’s interest. Sometimes it’s not worth it, sometimes it is.
If you intend to walk, be prepared to be forced into bankruptcy, which gives short term financial control of your affairs to a court. Beyond that, if and when you end up with a legal elimination of the debt, you will owe taxes on the income you received, income “generated” when your debt was removed.
Basically, like Dylan said, if you ain’t got nuttin, you got nuttin to lose. But if you have assets, you are legally compelled to use them to satisfy legal debts. s
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