If I Stop Paying My Mortgage, What Can the Bank Do?

Reader Question: I sold a property four months ago, and the money is in the bank. Now, my income is not enough to afford my current monthly payments and other expenses. If I stop paying my current mortgage, can the bank take my money in the bank?

No, the bank cannot take the money you have in the bank from the previous sale -- or any of your liquid funds, for that matter. Not unless you used some of that money as collateral on your mortgage loan (which I'm assuming is not the case).

In most cases, when you take out a mortgage loan for a house, the property itself is used for collateral. So while the bank probably can't touch your bank funds when you default on the mortgage, they can certainly take your house away.

If you stop making your mortgage payments, you will eventually go through the foreclosure process. In addition to damaging your credit, this will make it much harder to get another mortgage loan in the future.

If you are having trouble making payments on the home, you should pursue a strategy that lets you avoid foreclosure altogether. You can learn about these options on our main website (see previous hyperlink), and we also have some videos on this subject in the real estate video section of the site.

Hope that helps. Good luck.