Should we file a deed in lieu or wait for foreclosure after bankruptcy? 10 Answers as of May 02, 2011

Due to a bankruptcy two years ago, we are didn't reaffirm the house loan. The house has not foreclosed. Is a deed in lieu the same as foreclosure for your credit rating and responsibility in any costs (taxes, HOA, etc.). Should we wait for the bank to foreclose on the house or try a deed in lieu?

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Bankruptcy Law Office of Robert Weed
Bankruptcy Law Office of Robert Weed | Robert Weed
You can be eligible to buy again (under current policies) two years after you file bankruptcy but it has to be three years after the house is out of your name. If the bank is interested in a deed in lieu, it would get the house out of your name faster. (And also end your responsibility for the HOA faster.)
Answer Applies to: Virginia
Replied: 5/2/2011
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
A Deed in Lieu is not the same as a Foreclosure on your credit report. Also, while your name is on the property the Home Owner's Association can sue you personally for the fees.
Answer Applies to: New Hampshire
Replied: 4/29/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
The lender will probably not take your deed in lieu, and they will probably take a long time to foreclose on your house. They are slow to foreclose on properties that have monthly expenses like HOA fees as they can't sell them either. The taxes will be picked up by the buyer when it eventually sells. You will owe the HOA fees unless you file for bankruptcy.
Answer Applies to: California
Replied: 4/28/2011
Bankruptcy Law office of Bill Rubendall
Bankruptcy Law office of Bill Rubendall | William M. Rubendall
A deed in lieu of foreclosure will speed the process compared to waiting for a foreclosure. Neither have tax implications because the personal liability has been discharged in the bankruptcy. HOA dues are still owed until the foreclosure or deed in lieu is completed; that is another reason to do a deed in lieu. Finally, there may be a slight advantage, although not necessarily, to having a deed in lieu for credit rating purposes.
Answer Applies to: California
Replied: 4/28/2011
Benson Law Firm
Benson Law Firm | David Benson
According to Fair, Isaac & Company, the entity that developed FICO scores, the average points lost in a mortgage foreclosure are as follows:

30 days late: 40 - 110 points 90 days late: 70 - 135 points Foreclosure, short sale or deed-in-lieu: 85 - 160 Bankruptcy: 130 - 240

As you can see, the hit you take on a foreclosure is about the same as a deed in lieu of foreclosure or a short sale.
Answer Applies to: Ohio
Replied: 4/29/2011
    Ferguson & Ferguson
    Ferguson & Ferguson | Randy W. Ferguson
    You should contact your attorney you hired in your bankruptcy. They would be the best person to answer your question.
    Answer Applies to: Alabama
    Replied: 4/29/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    A deed in lieu of foreclosure has to be accepted by the bank. If the bank will not agree to it then you must wait for the foreclosure or try a short sale if you are in a hurry to get rid of the house. They are all equally bad for the credit report, particularly since already filed a bankruptcy case. So keep the house while you can, keep it insured, and live free (except the post-bankruptcy HOA fees which continue to acrue while you are in possession) for a while until the bank takes it away. Taxes are a lien against the property and not a personal debt so you will not have to pay the property taxes.
    Answer Applies to: California
    Replied: 4/28/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    You cannot just file a Deed In Lieu Of Foreclosure. A Deed In Lieu has to be accepted by the bank to be valid. Usually the bank will be reluctant to take a Deed in Lieu Of Foreclosure as they take the property subject to any junior liens you have, and the bank would rather be certain any junior liens are removed which is done by having them "wiped out" in the foreclosure sale. Any resolution of the debt by a means other than by foreclosure will have a lesser impact on your credit than a foreclosure will. Depending on the state where you live, you may or may not have personal responsibility for property taxes and homeowners dues. In California the property taxes go with the property and are not the personal responsibility of the owner. In the event of a foreclosure the new owner will have to deal with back taxes. However, the homeowner has personal liability for HOA dues which does not end until title transfers to the name of someone else, either by a deed or foreclosure. However, any HOA dues which were due prior to the bankruptcy would have been discharged in that bankruptcy case.
    Answer Applies to: California
    Replied: 4/29/2011
    Law Office of David P. Farrell
    Law Office of David P. Farrell | David Farrell
    You can't force a deed on the bank. A deed in lieu of foreclosure isn't something you "file". Your lender has to accept it, which it may or may not be willing to do. Call your lender. As far as property taxes, in California, property taxes are an obligation in rem, meaning they attach to the property; you are not personally responsible for property taxes. Your lender will likely pay the property taxes because delinquent property taxes take priority over consensual liens like mortgages. If you still occupy the property, stay current on the HOA dues. If you no longer occupy the property you may not be liable for the post-petition HOA charges. Speak to an attorney. Online blogs are no substitute for legal advice.
    Answer Applies to: California
    Replied: 4/28/2011
    Indianapolis Bankruptcy Law Office of Eric C. Lewis
    Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
    A deed in lieu or in rem foreclosure are pretty much the same with regard to credit reporting, since the note was discharged in bankruptcy. Your best bet will be the means by which you can transfer the property out of your name and to the bank the soonest.
    Answer Applies to: Indiana
    Replied: 4/28/2011
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