Posted on: 13th Dec, 2009 09:17 am
a friend of mine was told to sell his home in a property settlement - divorce.
the house sold for $30 000 less than what he owed, the house was in his name only.
he was told it was written off as a bad debt and he now has a bad credit rating.
does he need to pay this amount back?
I told him that a collection agency would be looking for you to pay that money back. If this is the case how does he go about it, as he has no equity in anything. His car is on it's last legs and he is looking at paying high interest on a car loan.
the house sold for $30 000 less than what he owed, the house was in his name only.
he was told it was written off as a bad debt and he now has a bad credit rating.
does he need to pay this amount back?
I told him that a collection agency would be looking for you to pay that money back. If this is the case how does he go about it, as he has no equity in anything. His car is on it's last legs and he is looking at paying high interest on a car loan.
Who "wrote off" the $30K debt? If it was the bank he owed the money to, then his debt is gone, but his credit rating will suffer. Not too bad of a trade if you ask me, you can build your credit rating back over time, but 30K is a lot to try and pay back.
Here's how I see the situstion as you've described it:
He sold the house for 30K less than the mortgage. In normal circumstances you'd be right in saying that someone would now be coming after him for the 30K shortfall. However, the creditor can, if they wish, forego the debt much as they would do in a negotiated debt.
In this case, the debt is discharged, but he will take a hit in his credit score.
Here's how I see the situstion as you've described it:
He sold the house for 30K less than the mortgage. In normal circumstances you'd be right in saying that someone would now be coming after him for the 30K shortfall. However, the creditor can, if they wish, forego the debt much as they would do in a negotiated debt.
In this case, the debt is discharged, but he will take a hit in his credit score.