Most people struggle to pay all of their bills. They live paycheck to paycheck,
some with the help of their credit card. Though it is awful to lose a
home, there might also be some relief. You are going to have less debt
to find ways to pay off.
Many wonder about other
debts. They wonder what debts a foreclosure will get rid of. What does it really do?
Mortgage & Refinancing Debt
A foreclosure does help with debt, but not all of it. It will take away
their original mortgage. There are also times when a foreclosure will
also remove any debt due to refinancing your home, as well as home equity
loans and second mortgages.
You may be required to pay off your home equity loans or second mortgages
if there is not enough money received in the foreclosure. This often happens
when your home is not worth what you paid for it, meaning that you owe
more money on it than it could be sold for at this time.
When your home gets sold, if you don't have enough insurance to protect
you, you may be required to pay the difference between what was paid for
the home and what you owe. This is called a deficiency judgement and allows
the bank or mortgage company to collect the difference from you.
Other Debts & Bills
Note that, even if you go through a
foreclosure, you will still be required to pay your other bills. You will still have
to pay your car payments, credit card bills, and other forms of debt that
you may have. Though you will lose a significant amount of debt, you are
not going to be completely debt free.
Contact us for all of your legal needs.