QUESTION
Does a Deed in Lieu affect credit as negatively as a foreclosure?
Asked on Sep 07th, 2012 on Foreclosures - Florida
More details to this question:
We were discharged from a Chapter 7 Bankruptcy in 2009. While we did not reaffirm our mortgage, we continued to live in the home. We are ready to walk away to get a fresh start in three years. As I understand it, letting the bank actually foreclose can take some time to complete. If a Deed in Lieu of Foreclosure is done, will we be off the note almost immediately? Our credit report also shows a $0 balance to the lender. I understand both are one in the same but is a DIL better to do than to have the bank do all the necessary leg work to foreclose? Will we still get a hit on our credit showing a foreclosure after it showing a $0 balance due to Chapter 7 Bankruptcy?
4 ANSWERS
Banking Attorney serving Miami, FL
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The Barrister Firm, P.A.
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Foreclosure means final judgment which means that you would have a public record recorded against you in your credit profile. Public records have a profound effect on your credit. A "DIL" would not have the same effect on your credit profile and your bankruptcy has prevented the possibility of a deficiency judgment.
Answered on Sep 17th, 2012 at 8:21 PM
Bankruptcy Attorney serving Phoenix, AZ
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Law Office of D. L. Drain, P.A.
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You should talk to a real estate lawyer in the state where your property is located. A deed in lieu might expose you to a deficiency.
Answered on Sep 17th, 2012 at 8:18 PM
Bankruptcy & Debt Attorney serving Syracuse, NY
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Theodore Lyons Araujo
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There are some realtors that believe a Deed in Lieu is better than a foreclosure, but I have seen no proof of that. However, in your case, it is irrelevant. The Deed in Lieu is not reported on the credit report nor is a foreclosure because you filed bankruptcy before the creditor got the judgment.
Answered on Sep 14th, 2012 at 10:36 PM
Criminal Defense Attorney serving Deltona, FL
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R. Jason de Groot, P.A.
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A deed in lieu can be a good way to avoid foreclosure proceedings, if the bank will take one.
Answered on Sep 14th, 2012 at 10:24 PM