It seems to me a lot of lawyers are touting that you have to file bankruptcy in conjunction with the foreclosure timing.
My wife and I don’t want the house anymore, can we just let it go through the foreclosure process and then file bankruptcy 6 months down the road?
Originally posted 2010-01-15 12:32:34. Republished by Old Post Promoter
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You really should speak to an attorney in your state who has experience in bankruptcy. The rules for bankruptcy are federal, but each state has its own list of exemptions that may have an impact on your circumstances. Also, with the change in bankruptcy laws in 2005, you may not qualify for a bankruptcy. Again, an attorney will be able to look at your entire financial picture and your state’s exemption rules and give you a more detailed and precise answer than someone online (like me) who does not know more about your circumstances.
You may have other options — short sale and deed in lieu of foreclosure. I realize a discussion of these options is outside of the scope of your question, but if you are looking at foreclosure and bankruptcy, a short sale or deed in lieu of foreclosure are two other options to consider. I am leaving a link below to an article that discusses the positives and negatives of short sale, deed in lieu of foreclosure, and foreclosure.
Briefly, though, in both short sale and deed in lieu, the home owner makes an agreement with the lender to make reduced monthly payments and stays in the property while it is put up for sale. The home owner agrees to maintain the property, continue to keep utility payments current, and so on. When the home owner receives an offer from a potential buyer, the lender must approve the sale.
The result is not really a win-win for both parties, but a “lose less-lose less” because the lender does not have to go through the expense of filing a foreclosure, and the home owner does not have to live with a foreclosure on their credit report.
The technical legal term for what you describe is throwing the baby out with the bathwater.
1. List the house for sale. Present the best offer to the bank as an offer for Short Sale.
2. Ask the bank for a deed in lieu of foreclosure (without recourse).
3. Allow the home to foreclose, but ask the judge to waive the deficiency judgment.
4. Settle a deficiency balance with the proverbial ‘pennies on the dollar’ because it’s so often paired with bk.
5. Only if all 4 of those fail and an aggressive bank is about to garnish your wages or attach your assets, file bk.
Then again, if $90k in cc debt is why you can’t afford the house, maybe filing bk is inevitable.
I would visit http://diylegalinfo.com/bankruptcy_Links.html/ They have a lot of good information on bankruptcy questions.