How Staying in Your House During Foreclosure Helps Your Community

The longer you stay in your home throughout the foreclosure process, the better off your lender, the ultimate purchaser, and your neighborhood will be. You’ve undoubtedly read articles about neighborhoods full of vacant homes, which are plagued by theft and vandalism. It’s become a very serious problem.

If the owners of those homes stayed put and continued to maintain them, everyone’s home values would likely be a lot higher. If you are the first one (or even the second or third) on your block to go through foreclosure, you single-handedly can be responsible for propping up the value of surrounding properties. My point is that you are earning your keep by remaining on the property until a new owner is ready to assume occupancy.

Walking Away From Your House

What about just walking away from your house? If you do, sooner or later the lender will foreclose on the property and sell it. You may think this won’t concern you; you’ll be gone, onto the next phase of your life. In fact, this may or may not be true, depending on your potential tax liability and potential liability for the unpaid part of the mortgage. Some people might be better off, emotionally, by shutting their old house out of their mind and finding new shelter in some faraway location. But for most people, this option makes the least sense.

If you want to use the foreclosure to your best advantage, you should at least consider remaining in the home for as long as possible—payment free—and consider filing for bankruptcy to rid yourself from any liabilities arising from your former home ownership. And if tax liability is an issue, you should do your best to file for bankruptcy before the foreclosure sale.