What are the options to get rid of a house after Chapter 7 discharge? 16 Answers as of August 21, 2014

We received a chapter 7 discharge on 6/6/2014. We intended to keep our house and car, and have kept current on payments, but after re-assessing our situation we are finding that our mortgage is too large of an expense for our income level. We are not able to save any money and have three young children so those expenses keep rising. We are wondering what options we have to get rid of our house, so that we can find a better living situation. We still owe more on the home than its estimated market value. Any suggestions you have would be greatly appreciated. Thank you.

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Stephens Gourley & Bywater | David A. Stephens
Try a short sale or live there for free until the foreclosure happens. I am assuming you did not reaffirm the mortgage as part of the bankruptcy.
Answer Applies to: Nevada
Replied: 8/21/2014
As long as you did not sign a reaffirmation agreement the mortgage debt has been discharged in the bankruptcy. The mortgage continues to hold the lien on the house. You can just walk away from the house anytime. You probably should notify the mortgage company and give them the keys when you decide to leave. Assuming that you made the decision to give up the house do not make any further payments.
Answer Applies to: Minnesota
Replied: 8/19/2014
GARCIA & GONZALES, P.C. | Richard N. Gonzales
Assuming no reaffirmation agreement was signed, you can return or surrender the home at your convenience. They can not evict until after they foreclose on the home, so you can continue to live there until then.
Answer Applies to: Colorado
Replied: 8/18/2014
A Fresh Start
A Fresh Start | Dorothy G Bunce
Your best option would be to sell the property, even if it had to be done by a short sale. This should not be a problem if your bankruptcy case is closed. If your bankruptcy case is not completely closed (which is an issue apart from you having received your discharge), then you may need court approval to sell the property. BTW, you might be able to afford your house with a loan modification & after a Chapter 7 discharge is an ideal time to apply for this type of help.
Answer Applies to: Nevada
Replied: 8/18/2014
You could try to do a short sale on your property. This would involve obtaining an offer for the current value of the home and then negotiating with the lender to accept the offer of the current value and writing off the difference.
Answer Applies to: California
Replied: 8/18/2014
    Steele, George, Schofield & Ramos, LLP
    Steele, George, Schofield & Ramos, LLP | Alan E. Ramos
    You could consider a strategic default, in which you stop making payments and live in the home until it is sold in foreclosure. You need to make sure that you pay attention to the mail, as important time-frames will be disclosed. Initially, you will receive calls/letters from the lender regarding your failure to pay the mortgage. You could tell them that you are not going to be making payments in the future and will let the property go to foreclosure. They may offer you a loan modification. I can't give you an opinion on that, as it all depends on the details of the offer (if a real offer is actually made). The following is only if you are in California. You will then receive a "Notice of Default" this is a 90-day period in which you can pay what is owed for missed payments and return your loan to normal status. At the end of the 90-day period, a "Notice of Sale" will be sent. This will have a date, time and location for the foreclosure sale, a minimum of 20 days from the date of the notice. Once the sale has been concluded, you will no longer be on title or responsible for the property. You should contact the new owner (which may be your lender) and make arrangements to move out. You do not want to wait to be evicted. If you do, you will be listed on a database that will make it very difficult for you to rent in the future. Also, as long as you are on-title, you will want to make sure that your liability insurance is paid and any homeowner's association dues/assessments are paid. The lender may offer you a "deed in lieu of foreclosure" as an alternative to non-judicial foreclosure. This could be advantageous to you, but you should not enter into an agreement of this sort without the advice of counsel. This has been a general discussion of this issue and should not be relied upon without advice of counsel, as specific facts could determine the appropriate course of action to take.
    Answer Applies to: California
    Replied: 8/18/2014
    Garner Law Office
    Garner Law Office | Daniel Garner
    Unless you reaffirmed your mortgage (and most competent lawyers would not advise doing so) you can walk away from the home without risk of being pursued for a deficiency if the lender is unable to sell it for what you owe. However, many lenders are in no big hurry to take back property for which they would become responsible. Therefore, it is in your best interest to be proactive and contact the mortgage lender to see if you can voluntarily sign over the deed in lieu of a foreclosure. The sooner you can get the property out of your name, the sooner you will be able to drop the insurance on it. You could also offer to assist the mortgage lender in arranging for a short sale to a willing buyer. Just make sure the short sale agreement clearly absolves you of any responsibility for the deficiency on the mortgage after the sale. Even with a bankruptcy, it is better for your credit rating if you can avoid a foreclosure.
    Answer Applies to: Oregon
    Replied: 8/18/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    A strategic default can get you a few years in the house without paying the mortgage so you can save some money. Or you can short sale the house. Or you can sign the deed back over to the bank. You can call us to discuss these options if you like.
    Answer Applies to: New York
    Replied: 8/18/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    Stop making the payments. Stay there until they foreclose. Every state has different foreclosure proceedings so check with local counsel.
    Answer Applies to: California
    Replied: 8/18/2014
    Ronald K. Nims LLC | Ronald K. Nims
    Assuming here that you didn't reaffirm on the mortgage. The first option I'd advise you to explore is a short sale. Contact your lender (your attorney may have to do this, lenders aren't allowed to make any collection efforts after discharge, so some lenders won't speak with you at all.) Then list the home, most lenders want to see that the home was listed for at least 90 days before they will consider a short sale. Do not just walk away from the house, your name is on the deed and you still have all the ownership liabilities of a vacant house.
    Answer Applies to: Ohio
    Replied: 8/18/2014
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    Find a good realtor who knows how to do a short sale and get the home sold. Good luck!
    Answer Applies to: Nevada
    Replied: 8/18/2014
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    You can try a short sale. Also if you did not sign a reaffirmation agreement in regards to the mortgage, then you can walk away, and the Mortgage company will still foreclose, but they will not be able to come after you for any deficiency. If you did sign a reaff then I would tell you a short sale is your best option.
    Answer Applies to: Florida
    Replied: 8/18/2014
    Law Offices of Linda Rose Fessler | Linda Fessler
    You could stay in house and not make payments, ask for modification, ask for a pay down of the principal, sue the Bank, etc.
    Answer Applies to: California
    Replied: 8/18/2014
    Law Office of J. Thomas Black, P.C.
    Law Office of J. Thomas Black, P.C. | J. Thomas Black
    In such a situation we often recommend to our clients that they do a "short sale" of the property. There are real estate brokers that specialize in short sales. A short sale is a sale in which the mortgage company agrees to take less than the full amount that they're owed, and release you from any further liability. It's not uncommon for them to even agree to pay you some amount of money to move (relocation allowance). Otherwise, if you did not sign a Reaffirmation Agreement, and your mortgage company was listed as a creditor, then your personal liability for the mortgage was discharged by the bankruptcy. You could simply stop making payments and let the mortgage company conduct a foreclosure sale. You own the house until the actual foreclosure sale takes place, which could take several months or even longer. By not making payments, you could save up money to move. You will have a foreclosure on your credit, but that comes off in seven years.
    Answer Applies to: Texas
    Replied: 8/18/2014
    Law Office of Andrew Oostdyk
    Law Office of Andrew Oostdyk | Andrew Oostdyk
    If you did not sign a Reaffirmation Agreement for the home mortgage, you will be able to surrender the home without any liability on the mortgage. You may want to contact the mortgage company and ask if they are willing to modify your mortgage based on the fair market value of the house, but be aware that if you refinance the mortgage, you will once again become liable for the mortgage as it is a new debt incurred after your Chapter 7 discharge.
    Answer Applies to: Texas
    Replied: 8/18/2014
    Lynch Law Offices, P.C. | Roseanne N. Lynch
    You still have the option of selling the house and settling with the Lender for less than the full amount of the loan, a short sale. The short sale can be difficult but it will give you the chance to start rebuilding your credit.
    Answer Applies to: Illinois
    Replied: 8/18/2014
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