The two main types of bankruptcy for homeowners are Chapter 7 and Chapter 13. Of course, both have a different outcome for the homeowner. With Chapter 7, homeowners often ask the courts to discharge their mortgage debt altogether, while with Chapter 13, debt is reorganized and the home is usually kept. In either form of bankruptcy, however, abandoning a Florida home may not be a good idea, whether foreclosure has occurred or not.
As mentioned, when a person files Chapter 13, he or she usually sets up a way in which most of the debt owed is reorganized and paid over a period of three to five years. When that time is up, the filer has a clean slate and is caught up on any bills that were behind. The person continues to make mortgage payments if needed and stays in the home.
With Chapter 7, the debts are usually discharged, and while some may keep the home, others may not. Unless the home is sold or liquidated by the bankruptcy court, however, the homeowner is usually still responsible for it. Even if the home mortgage is discharged by the bankruptcy court, the homeowner is not free to abandon it.
Abandoned homes have come to be known as zombie properties. This has become a significant problem in Florida and other states since the housing market crash. According to the law, however, the owner of a zombie home can still be held financially responsible for it even after abandoning it. That means that the homeowner may be billed for maintenance costs and municipal cleanup.
In some cases, a lender may refuse foreclosure on a Florida home after the homeowner declares bankruptcy. When this happens, the homeowner may choose to speak with a bankruptcy attorney about the best way to proceed. Abandoning the home is never a good idea, and a bankruptcy lawyer can help the homeowner to decide on a better course of action.
Source: homeguides.sfgate.com, “Bankruptcy & Abandoning a House“, Accessed on Aug 1, 2017