Walking away from debt can have consequences you never expected, ranging from lawsuits, to judgments for loan deficiencies, to tax bills for forgiven debt. Before you walk away from an underwater home or a car you can't afford, you should discuss your situation with an experienced bankruptcy lawyer.
At the law firm of Gross & Patterson, LLC, in Pittsburgh, our attorneys offer a free initial consultation to discuss your case and explain your options.
What Happens if I Walk Away From a Home That Is Underwater?
Large numbers of Pennsylvania homeowners are underwater on their mortgages and dealing with banks that are unwilling to renegotiate the loans. While it may be tempting to just walk away, doing so can result in unwanted consequences:
- You may still have certain liabilities for the property.
- You may be subject to a lawsuit if someone is injured on the property.
- The mortgage company may still try to hold you responsible for the mortgage or any deficiency that results from a foreclosure.
- If the mortgage company forgives the debt, you may owe taxes on the forgiven debt. The IRS considers forgiven debt as income.
The only sure way to eliminate debt from a foreclosed home is to file bankruptcy.
What Happens if I Give My Car Back to the Lender?
Even though a bank repossesses a car, you may still be responsible for any deficiency on the loan. That deficiency can be a significant amount, since banks typically sell repossessed cars for a fraction of what they are worth. As a result, you could end up owing thousands of dollars for a car you no longer own.
If you file bankruptcy, you can discharge debt from a repossessed car. Under certain circumstances, you may also be able to force the creditor to reevaluate the amount the car is worth, which may lower the amount of your loan to the current value of the car.
For More Information About Bankruptcy
To schedule a free initial consultation about what can happen if you walk away from debt, call 412-567-4732 or fill out the contact form on this website.
