What Happens After Foreclosure If You Still Owe Money?

: Reese Baker & Associates

  Filed under: Bankruptcy Information, Mortgage

home, foreclosure, court, bankruptcy attorney houston, texas bankruptcy lawyers, attorney, lawyer, attorneys, lawyers, College Station, Bryan, Houston, Texas, TX, lawyers in houston, bankruptcy attorney,A question that is often asked, especially in the past few years with the amount of house foreclosures in the U.S., is what happens to the balance of monies owed after a foreclosure. Do you still owe money to the bank or lender if they sell the home for less than what you owed on the mortgage?

The full answer to that question really depends on which state you reside in. Some states have a statute of non-recourse. What this means is that if the lender decides to foreclose and sell your home at auction then they will have to be fully satisfied with the amount of monies that they recoup from the auction and will be unable to pursue any outstanding monies.

So, if you owe $400,000 on your mortgage and find yourself underwater and the bank or lender decide to foreclose and the house sells at auction for only $350,000 than the lender must be satisfied with that amount and cannot try to recoup the balance from you. If however, you live a state that does not subscribe to non-recourse than the lender may have the right to pursue the difference in a court of law and have you repay the full amount outstanding.

Click here to find a helpful chart comparing state mortgage laws as to whether states are classified as recourse or non-recourse and what their redemption periods are.

Other states have different laws such as the homeowner only being liable for the difference between what the house sells for and fair market value of the home not necessarily what is owed. It is incumbent on the homeowner to seek out the advice of a qualified bankruptcy attorney, Houston Texas before any action is undertaken. Even if you know that a deficiency judgment isn’t allowed, you’ll need a Texas bankruptcy attorney to help you successfully navigate the complex process needed to ensure you get debt relief.