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Homes Surrendered During Bankruptcy Still Go Through Foreclosure

Filing personal bankruptcy can be a complicated process and many homeowners wonder why their homes still go through the foreclosure process even though they have already surrendered their home in their bankruptcy petition. The purpose of Chapter 7 bankruptcy in particular, is to discharge certain debts in order to give individuals a “fresh start,” making them no longer liable to pay for any of the discharged debts. In order to discharge a mortgage and transfer title back to the lender, one’s home must go through the foreclosure process.

Filing bankruptcy allows individuals to discharge their property debt, which ends their liability to make mortgage payments on their home, and transfers the remaining balance of the mortgage to be discharged during the bankruptcy. This process results in the loss of the property as the home is surrendered back to the lender.


The surrender process allows individuals filing bankruptcy to be relived of any further obligation to a particular creditor. Even though the individual has already surrendered their home back to the lender through the bankruptcy petition, the title will still legally remain in the homeowner’s name until the lender forecloses on the property and obtains the legal rights to sell the home.

Individuals filing bankruptcy must surrender their home to be relieved of financial liability. Surrendering the home permits an individual to give up property they own that is subject to a lien or outstanding loan. Once the lender receives the property back, the individual is relieved of any further obligation for the debt. It is also important to note that the release of obligation occurs upon surrender in bankruptcy even if the value of the property returned is not sufficient to cover the outstanding balance of the mortgage loan.


Because the individual’s property may be subjected to other liens and mortgages that pledge the property to creditors, the lender still has to foreclose on the property to legally transfer the title back into the lenders name before they are able to sell the property to a third party.

The amount of time it takes for the lender to foreclose on an individual’s property varies per case and the amount of forecloses proceedings the lender is handling. Once debts are discharged and the property is surrendered, the foreclosure will not show up on an individual’s credit report, since the property was already discharged.

Contact an Experienced Attorney

Filing for bankruptcy can be difficult, especially when the process includes surrendering a home. It is important to contact an experienced bankruptcy law attorney in your area to discuss your options and make sure you won’t be held financially or legally responsible for discharged debt.

If you are considering bankruptcy in Tennessee, contact the experienced attorneys at Rothschild & Ausbrooks, PLLCby email or call 615-866-2265 or toll free 866-656-8909.

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