Ask Terry Questions “walking away from my mortgage

“walking away from my mortgage

By Terry Savage on December 18, 2014 | Housing / Real Estate

what are the legal & financial consequences of “walking away” from your house/mortgage?

Terry Says:  Oh gosh, I hate to see you do this!  At a very minimum, your credit will be ruined for the next 7 years.  At worst, the lender could go after you for the balance of the debt — although I must admit that in the crunch of the past recession, that didn’t happen often.  But if they think you have other assets, that could be in their plans.  It depends on where you live.  If you live in a state that allows the lender to get a judgment against you, they can follow you anywhere and garnish your wages, lien future assets — and a judge can even put you in jail if you fail to respond.  Some states are “non-recourse” states, limiting the ability of the lender to collect beyond proceeds from sale of the house.

So if you are considering walking away from your home, I would suggest you contact legal aid in your state to see what laws apply. Or call the National Foundation for Credit Counseling at 800-388-2227 to find out the potential consequences in your state (that number will connect you to the nearest local agency, and you can trust them).  But don’t just move out in the middle of the night, or this financial issue could follow you forever!



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