Should we file foreclosure, shortsale, or deed in lieu of foreclosure after bankruptcy? 10 Answers as of May 17, 2011

We have not paid on or mortgage in 3 yrs., we have tried to do a modification to stay in our home but have not been able to, the bank is now offering to try to do a short-sale for 3 months and then to do a deed in lieu of foreclosure. When we filed bankruptcy on our credit cards yrs ago, we did not reaffirm our mortgage, what is the best thing for us to do and what are the negative impacts and cost that we will incur?

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Dearbonn Law Offices
Dearbonn Law Offices | Ajibola Oluyemisi Oladapo
A short sale will be the best option, the bank sells the house for less than the amount of the loan and will not go after you for a deficiency which they can do if the foreclose.
Answer Applies to: Washington
Replied: 5/17/2011
The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
The best thing is to get it out of your name as soon as possible. How that happens is not particularly important since you owe no further obligation on the debt thanks to your bankruptcy. What you don't want to have happen which I'm seeing a lot of these days is you vacate the property and the bank never forecloses, and you get hit with all kinds of City penalties and fines which are NOT covered in your bankruptcy case. So, if you're giving up the property, make sure title changes hands. If you can do this quickly via a short sale or deed in lieu, great. If not, let them foreclose.
Answer Applies to: California
Replied: 5/16/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
There is nothing you can do. Only the bank can foreclose. They will not accept your deed in lieu, and they have to agree to a short sale. The fact that the bank is *offering *a short and and then a deed in lieu does not make sense to me. If there is a short sale there is no need for a deed in lieu. Something is fishy here.
Answer Applies to: California
Replied: 5/16/2011
Law Office of Larry Webb
Law Office of Larry Webb | Larry Webb
Generally, you should file bankruptcy before you do a short sale, foreclosure or deed in lieu. You did not give us enough facts to answer your question. In California a purchase money first mortgage is non-recourse, which means the bank cannot sue for the deficiency. Has it been more than 8 years since you filed bankruptcy? Be very careful signing any agreement with the bank.
Answer Applies to: California
Replied: 5/16/2011
Benson Law Firm
Benson Law Firm | David Benson
Short sales can take a long time and require a good deal of work. If the bank will take a deed in lieu of foreclosure, you might want to look into that since foreclosures are a bigger hit to your credit score. That being said, no decision with regard to a home should be taken without adequate consultation with competent counsel.
Answer Applies to: Ohio
Replied: 5/16/2011
    Indianapolis Bankruptcy Law Office of Eric C. Lewis
    Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
    If you did not reaffirm the mortgage, there is no need to participate in a short sale, as you can simply walk away and you're not on the hook for any costs associated with a foreclosure directly.
    Answer Applies to: Indiana
    Replied: 5/16/2011
    Greifendorff Law Offices, PC
    Greifendorff Law Offices, PC | Christine Wilton
    I just talked to a couple of real estate professionals yesterday and am of the opinion that a short sale after your bankruptcy will ease your credit score, show mortgage responsibility, and help you to obtain another property within a shorter period of time. Call me and I'll send you over to our friends.
    Answer Applies to: California
    Replied: 5/16/2011
    Bankruptcy Law Office of Robert Weed
    Bankruptcy Law Office of Robert Weed | Robert Weed
    Whatever you work out with the mortgage company, you don't owe them any money. The bankruptcy still protects you.
    Answer Applies to: Virginia
    Replied: 5/16/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    Since you no longer have personal liability on the mortgage due to having filed bankruptcy, it doesn't matter as a matter of law whether your house is foreclosed, sold or transferred to the lender by a deed in lieu of foreclosure. There are certain advantages in avoiding a foreclosure if possible. Specifically, it would be best for credit reporting purposes to have a short sale, because it is a sale not a foreclosure. A deed in lieu of foreclosure also avoids the negative future credit impact of a foreclosure. First choice should be a short sale, second choice a deed in lieu of foreclosure and the last choice is allowing the foreclosure instead of either of the first two choices, if offered.
    Answer Applies to: California
    Replied: 5/13/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    Foreclosure has the worst impact on your credit, then a Deed in lieu and a short sale has the least impact.
    Answer Applies to: California
    Replied: 5/13/2011
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