What to do if I am co-owner on a mortgage and my partner filed bankruptcy but I cannot make payments alone as I am on disability?

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What to do if I am co-owner on a mortgage and my partner filed bankruptcy but I cannot make payments alone as I am on disability?

I do not have an assets other than personal belongings such as TV and computer. Should I file bankruptcy or just let the bank reclaim mortgage.

Asked on May 19, 2014 under Bankruptcy Law, Wisconsin

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

Your state allows "deficiency judgments"--that is, if the lender forecloses on property but the property is worth less than the then-current balance of the loan, the lender could sue the borrower(s) for the difference between what it realizes from foreclosing on and selling the property and what they owe on the loan. Therefore, if you are underwater on the mortgage and IF the bank does come after you personally for any amounts due, you  may wish to consider bankruptcy, though disability income is typically exempt from execution or garnshment (a creditor cannot take it); however, unless the home is worth less than the loan and the lender does actually take the step of trying to sue you for the money, there would seem to be, from what you write, little incentive for you to go through the bankruptcy process. Simply letting the bank have the property may be all you need to do.


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