Quote:
Originally Posted by susieh
If your home is in foreclosure, you file bankruptcy, and let house go .... what happens to it? I know the bankruptcy house stops the foreclosure, but does the bank actually complete the foreclosure once the BK is settled? So you have a BK and a foreclosure on your credit, right?
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Concerning a Chapter 7 - will be listed on your credit for 10 years. this type of Bankruptcy is for erasing revolving debt, not secured debt. Over the next 10 years there will be lost opportunities, you will be denied and charged (pay) more. Your will be labeled as a credit risk for 10 years. If you are pushed into a bankruptcy be an Lawyer - they will make it sound easy because that is what they do. I don't approve of this type of debt unless the amount owed is over $75,000. If you are concern with your future, there is a better option.
Concerning a Chapter 13 - this type of Bankruptcy is for secured and revolving debt combined. The main reason why home owners file a chapter 13 is stop a foreclosure to save their home. Payments will be determined and made to a court assigned trustee for your to 5 years. This will be listed on your credit for up to 7 years before it is removed. If you make late payments to a trustee, the bankruptcy can be automatically discharged. If you can late on payments - the mortgage company can file a "Relief of Stay" to remove to home from bankruptcy protection.
Answering your question if your home is in foreclosure and going to let house go. Noting the IRS wanting their cut - you receiving a 1099C for the cancellation of the loan (debt), that you owe income taxes on. Depending on what state you are in, your lender has recourse and can pursue a deficiency judgment years later to come after you for the amount you owed to what the home was eventually sold for. When this happens - the sheriff can take and auction of personal property to satisfy this debt. At this point to save what you have, the only option is to pursue a bankruptcy.
Other options to save a home - a moratorium is filed directly with the Lender to postpone a foreclosure through a QWR, showing the home owner can afford and can continue living there. If they can no longer afford the loan at the lowest possible payment. Then do a short sale or deed in lieu to walk free and clear of the property. This is the best and least damaging way for ones future.
Other options for revolving debt - it is so easy to negotiate debt at a lower settlement. The main objection that that is coming up with a lump sum payment. My counter argument to that is - an Attorney created trustee account. The person pays into at an agreed upon payment. As the amount grows, debts are settle. That way the credit report can be listed "Settle As Agreed" for that card.
People are being pushed into bankruptcies to easy when there are other options available. Attorneys are concerned about making money, before helping or thinking about the financial future of an individual.
RMC