Dear Customer (name blocked for privacy) - You may be liable to the 2nd Mortgagee depending on the sale price of the home and other factors. I would not necessarily file a bankruptcy at this point if you are going to give up the house. You can always file for bankruptcy later on if you get sued. Of course bankruptcy requires you to give up all of your other assets less the amount that are exempt so you would need to discuss your entire financial situation with a bankruptcy attorney before filing.

There are also other options such as Chapter 13 which can allow you to keep your home and get a payment plan. If a suit is won against you all that can happen is that the creditor can proceed with collection such as bank attachments and garnishments which would be stopped by a bankruptcy filing.

I would strongly urge you to consult with a bankruptcy attorney to see what your options might be before you simply throw in the towel.

David Kennett - JD - Attorney at Law