If Chapter 7 has been discharged, do we still need to provide the bank the information they are asking for? 17 Answers as of July 11, 2014

Our chapter 7 bankruptcy was discharged in October and the bank has yet to foreclose on the house. We surrendered the house in the bankruptcy and it has been vacant for over a year already. I called the mortgage company today and asked for a deed in lieu, but they say they need to have financial information (bank statements, pay stubs, etc) and a hardship letter in order to proceed. Why would they need this other than formality (that is what I was told it is), and can they deny our deed in lieu for any reason because of it? Doesn't make any sense since we are not financially responsible for the debt any longer. Do I need to worry about this or just send them what they ask for?

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Moore Taylor Law Firm, P.A.
Moore Taylor Law Firm, P.A. | Jane Downey
You can tell the bank to foreclose.
Answer Applies to: South Carolina
Replied: 7/11/2014
Law Office of Melissa Botting | Melissa Botting
If you surrendered the house in the bankruptcy, there is nothing further you need to do. You do not need to sign a deed in lieu of foreclosure. You may do so if you would like, but it would be for their benefit and convenience to avoid the expenses of a foreclosure. You do not need to provide anything you don't want to provide. You are doing them a favor.
Answer Applies to: Texas
Replied: 7/11/2014
Law Office of Peter M. Lively
Law Office of Peter M. Lively | Peter M. Lively
If you did not reaffirm the loan during the bankruptcy case, then you do not have personal liability on the loan after discharge. However, the lender would be doing you a favor to accept a deed in lieu of foreclosure. Therefore, if you want to proceed with a deed in lieu you must cooperate with the lender's requests.
Answer Applies to: California
Replied: 7/10/2014
GARCIA & GONZALES, P.C.
GARCIA & GONZALES, P.C. | Richard N. Gonzales
Do nothing and don't worry about it.
Answer Applies to: Colorado
Replied: 7/10/2014
David R. Fondren, Attorney at Law
David R. Fondren, Attorney at Law | David R. Fondren
Don't waste your time and effort on this. You can offer to sign a deed if they want to avoid the expense of a foreclosure, but I would not go further. In the mean time, the municipality may still contact you for grass cutting if the bank has not taken physical control. Make sure you have shut down all utility accounts on the property. On a side note: IF the bank has NOT assumed responsibility for the building and since the property is technically still in your name, there is nothing preventing you from renting it out.
Answer Applies to: Missouri
Replied: 7/11/2014
    Lynch Law Offices, P.C. | Roseanne N. Lynch
    Send them what they ask for because the home still belongs to you and you may have certain responsibilities even though you do not owe the debt. There are programs for deeds in lieu that also pay a small amount to the Sellers and you will have to qualify for that by presenting your financials. They can deny a deed in lieu but there still may be other options, like short sale.
    Answer Applies to: Illinois
    Replied: 7/11/2014
    Steele, George, Schofield & Ramos, LLP
    Steele, George, Schofield & Ramos, LLP | Alan E. Ramos
    Here is the challenge for you: as long as you are on title, you need to continue to pay for liability insurance on the property (you are liable is someone is hurt on the property as long as you are on title). Also, if you there is a Homeowner's Association, you must continue to pay the assessments. There is no logical reason for the lender to require the information that they asked for; however, if it can get them to move on your request, you might want to consider giving them the information. While you no longer have personal liability for the loan on the home, you do have exposure. So you need to decide what is more important to you and move in that direction.
    Answer Applies to: California
    Replied: 7/11/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    Saying that you INTEND TO SURRENDER real estate in your bankruptcy is not the same thing as actually surrendering property. Actually surrendering property to the mortgage company will require them to either foreclose, accept a deed in lieu of foreclosure, or for you to complete a sale of the property. Since a foreclosure will be very bad for your credit, any of the other two options would be better for you - and the mortgage company knows this. You can't proceed with these other two options without the cooperation of your mortgage company, so you may have to "dance to their tune." I have seen many situations where people do not get their fresh start in bankruptcy because of expenses related to property ownership that accrue after the bankruptcy and the mortgage company refuses to foreclose because they don't want to pay these expenses either. This is advice you should have gotten before you filed bankruptcy.
    Answer Applies to: Nevada
    Replied: 7/10/2014
    Garner Law Office
    Garner Law Office | Daniel Garner
    A deed in lieu of foreclosure is entirely voluntary for the bank, so I would advise cooperating with them if they just want a paper trail to justify it. A foreclosure would be worse for your credit than a bankruptcy. It is in your interest to get it out of your name as quickly as possible, because you are still liable for anything that may happen on the property until the bank owns it.
    Answer Applies to: Oregon
    Replied: 7/10/2014
    EDWARD P RUSSELL | EDWARD P RUSSELL
    The mortgage debt was discharged in the bankruptcy. You need do nothing further.
    Answer Applies to: Minnesota
    Replied: 7/10/2014
    Law Office of J. Thomas Black, P.C.
    Law Office of J. Thomas Black, P.C. | J. Thomas Black
    Deeds in Lieu of foreclosure are not used much in Texas, because it is fairly simple, quick and cheap for a purchase money mortgage holder to foreclose. We have "non-judicial" foreclosures for mortgages that were used to purchase a home. Yes, to stand any chance of getting a deed in lieu of foreclosure, you will have to provide them whatever information that they want. The bankruptcy itself does not "surrender" the property and get it out of your name; it only discharges your personal liability for the mortgage. You still own the house until it is transferred to someone else, either through a foreclosure, an outright sale, or deed in lieu. You may have better luck doing a short sale, where a buyer is found to pay what the house is worth, but the mortgage company still has to approve it, which can be time-consuming. Our firm has a company that we refer people to that handles all the details, and typically negotiates a cash payment to the homeowner for moving expenses. Or, you may find a local real estate broker that would handle a short sale for you. You definitely want to get the property out of your name, for several reasons. You remain liable for ongoing Homeowner's Association dues; and if someone was hurt on the property, you could be liable, and other issues. If the mortgage company won't foreclose, I would take steps to get the property out of my name.
    Answer Applies to: Texas
    Replied: 7/11/2014
    Ronald K. Nims LLC | Ronald K. Nims
    Banks, generally, are in no hurry to pick up title to vacant properties. As long as you're the owner of the vacant house, you're liable if, for example, a kid is playing there and is injured. If the bank becomes the owner then the bank will have owner's responsibilities. There is no LEGAL reason why the bank should request financial information on a loan where you're no longer responsible but the bank may have it's own internal rules that have nothing to do with the law.
    Answer Applies to: Ohio
    Replied: 7/11/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    If you surrendered the house it would have been through a separate motion, not that you just said you would "surrender" it. A deed in lieu of foreclosure has to be approved by the bank just like a loan modification has to be approved. It sounds like it was not surrendered properly in your bankruptcy and you may want to do a short sale on the property instead.
    Answer Applies to: New York
    Replied: 7/11/2014
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    If you want them to do a deed in lieu, you have to do what they want. Otherwise they could leave you hanging on the foreclosure, you are not liable for the debt, but you are liable for the lawn, if someone falls on the property and hurts themselves, etc. They may have many reason for not foreclosing, like they don't want to be liable for a home that has set empty for a year or two. You discharged your responsibility for the mortgage, but you still liable for the house and any damage done to it. Sorry!
    Answer Applies to: Michigan
    Replied: 7/10/2014
    Berlin Patten, PLLC
    Berlin Patten, PLLC | Jessica Stewart
    Surrendering a home in bankruptcy does not take title out of your name. The bank must still complete the foreclosure process through its entirety or you can pursue a deed in lieu or a short sale. If you pursue either of these options, you will still have to provide all of the paperwork that the bank requests and go through the process the same way you would if you had not filed bankruptcy. Beware that although you are not liable for the underlying debt of the home, you are still liable for code enforcement issues, utility inactive account fees and new HOA dues post bankruptcy filing, if applicable while the title to the homes remains in your name.
    Answer Applies to: Florida
    Replied: 7/10/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    Deed in Lieu just speeds up the process of the bank taking title. What you need to be concerned about is that the property is vacant. Keep it insured because you could be sued if someone gets hurt there, or if there is a fire etc. AND you could be subjected to code enforcement fines if it becomes run down. It could be a VERY long time before they foreclose depending on your local market. If it is condo.... it could be years - and you could be liable for the post bankruptcy filing condo fees.
    Answer Applies to: California
    Replied: 7/10/2014
    Law Office of Shawn N. Wright | Shawn N. Wright
    You are still the owner of this house, although you have surrendered the home in the Chapter 7 bankruptcy case, neither the Court nor the mortgage company are required to take possession of the house or to foreclose on it. The mortgage company can still deny your request for a deed in lieu. You should cooperate with the bank's request if you want to pursue a deed in lieu. By the way, you state that you are "not financially responsible for the debt any longer". Yes and no. You cannot be sued for the mortgage loan personally and will not be responsible for any mortgage loan deficiency. Nevertheless, you are still responsible to your local township for building code violations and you are responsible for anyone entering onto the property. Be careful about this! You can't presume that the mortgage company will pursue any type of foreclosure, so as a result, this property could become a long-lasting nightmare for you.
    Answer Applies to: Pennsylvania
    Replied: 7/10/2014
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