During a typical bankruptcy yeah, but 2008 wasn’t typical.

Banks were losing paperwork, mortgages had passed through multiple hands, they couldn’t deal with the foreclosure volume. Hell, banks were going under. It was a complete mess. That’s why if you stopped paying your mortgage it was often 1-2 years before anyone even came knocking.

In many cases, if you simply sent the keys back and were in a non-recourse state, nothing more happened. The bank added the home to the foreclosure backlog and deemed the debt “uncollectable”.

If they balked, you go through a bankruptcy process, but who had time for that? Plus the government had programs to help relieve underwater homeowners.

There was a bit of a financial “reset” in a sense. Many people were allowed to wipe the slate clean and start over.