Zombie Foreclosure: Don’t Abandon Your Home to Escape Debt

Abandoning your home to escape your mortgage debt—what’s known as a “zombie” foreclosure—can be an ineffective strategy.

When some people are behind on their mortgage and facing foreclosure, they think that abandoning their home to the lender is their only option. By abandoning their home, they assume that it will be later sold in the foreclosure sale, relieving them of further liability on the mortgage. Although this often happens when the foreclosure process runs to completion, sometimes it does not. In cases where, for whatever reason, the foreclosure process is stalled or dismissed by the court, homeowners who have abandoned their homes can find themselves in a difficult situation.

What Is a Zombie Foreclosure?

When the foreclosure process is not completed, it can result in what is informally known as a “zombie” foreclosure (or zombie title). This occurs when the home is abandoned during foreclosure but is not later sold to a new owner.

Why is it that the foreclosure process is sometimes not completed? There are several reasons for this. In some cases, the lender lacks the paperwork necessary to complete the foreclosure. In others, the lender may determine that the home is not worth selling. Still, in other cases, the reason is unknown. Regardless of the reason, the homeowner remains the owner of the house and is still responsible for its upkeep.

Owning an Abandoned Home Causes Problems

Owning an abandoned home can cause several types of problems for the homeowner. For one, the homeowner is still responsible for property taxes and HOA dues (if applicable). Additionally, the abandoned home can also be vandalized or fall into disrepair, which can cause the homeowner to be liable for fines for violations of zoning codes.

Unfortunately, homeowners who have abandoned their homes are often unaware of these costs, as they assumed that the foreclosure process ran to completion. Because of this, these costs can mean financial disaster for them, as they are already in a weak financial position.

Get Help to Avoid Zombie Foreclosures

Because of the problems caused by abandoning the home, it is generally better to file bankruptcy if you would like to keep it. During Chapter 13 bankruptcy, your delinquent mortgage payments are put into a payment plan. Under the plan, you make an affordable payment towards this debt each month over three to five years. As long as you make the payment each month, you are able to stay in your home without fear of foreclosure.

If, conversely, you are in a situation where you cannot afford your home or no longer wish to remain in it, there are other legal options that can eliminate your liability for the mortgage and costs of ownership.

In either situation, it is a wise move to get legal help as soon as you become unable to make your mortgage payments. The experienced bankruptcy attorneys at Minnillo Law Group Co., LPA can listen to your situation and recommend the best option to help you out of your scary financial situation.