Can I Surrender My House Without Filing for Bankruptcy?

People with an abundance of debt and financial troubles are often riddled with questions about whether a house can be surrendered without also having to file bankruptcy. Fortunately, there are usually a number of alternatives to bankruptcy for homeowners in this position.

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The two most common forms of bankruptcy allow a home owner to stay in their house, at least for a while. However, those who wish to surrender their house do not have to file bankruptcy. There are a number of paths a homeowner can take when bills start piling up and mortgage payments get missed. It is frightening when banks begin sending out notices that loans are slipping into default, and when creditors begin threatening legal action. Many in-debt homeowners begin to panic, and consider getting out of their homes.

Surrendering the house could, after all, alleviate one huge expense every month if a homeowner is willing to downsize to a more affordable living space – a smaller house or an apartment, perhaps.

There are obviously many details that a homeowner would have to consider before making such a landmark decision. However, two sound alternatives to consider are equity and loan security.


If a homeowner has substantial equity in their home, surrendering it outright might not be the best course of action to shed a portion of debt. Equity, while not as valuable as liquid cash flow, holds a great deal of value and can give the homeowner some leverage with the bank.

Refinancing is an option that many homeowners consider. If a homeowner has equity in a home, he or she can also consider selling the home either through traditional real estate processes or through more complex methods such as short sales.

A short sale is a transaction between the homeowner, the bank and an interested third-party buyer or real estate investor. Essentially, the property is sold for a percentage of the outstanding debt on the home in order to avoid foreclosure and free the homeowner up from bankruptcy and all the credit woes associated with it. Since the decline of the real estate market and the economic recession that started in 2007, there has been a significant increase in the amount of short sales in the U.S.

Secured Loans

There is also the scenario of a homeowner who has put up a house as collateral for a secured loan or a second mortgage. In these instances, the homeowner may have taken out a loan for a number of reasons such as hospital bills, emergencies or investments, and put up their home or other property as collateral. If a person in this situation cannot repay the loan, surrendering the home or property, while understandingly difficult, could save a tremendous amount of financial burdens through a future bankruptcy.

It is in a debt-ridden homeowner’s best interest to contact a debt relief lawyer as soon as possible to explore options and take full advantage of the laws designed to protect homeowner’s rights.

Call now for debt relief at (817) 241-5552
We offer free consultations

Alice Bower, Attorney at Law, is a debt relief lawyer practicing in Fort Worth, Arlington, Irving, North Richland Hills, Grapevine, Colleyville, Mansfield, Burleson, Grand Prairie and Bedford.