Can I Surrender My Home or Auto in Bankruptcy?
Yes. If you no longer wish to keep your home or auto, bankruptcy is the perfect time to give it back.
Normally, when you voluntarily surrender your auto to the lender, the lender will sell it at auction and apply the sales proceeds to the debt you owe. If the sales proceeds are less the the amount of the debt, you still owe the balance (called the deficiency). But if you surrender your auto in bankruptcy, the deficiency is wiped out by your bankruptcy filing.
Bankruptcy is also a great time to get out of an auto lease.
Homes are a little different. A mortgage lender receives a shortened foreclosure process if it waives any deficiency (agrees to just take the house and not seek any money from you). 1st mortgage lenders commonly waive any deficiency. 2nd Mortgage lenders almost never waive a deficiency.
This website does not create an attorney-client relationship. The information on this website does not constitute legal advice. You are urged to obtain the advice of an experienced bankruptcy attorney regarding your personal situation.