QUESTION
If we do a DIL, will it be reported on our credit, or does the fact that it was in the bankruptcy protect us?
Asked on Jan 06th, 2017 on Bankruptcy - Nevada
More details to this question:
We filed for bankruptcy in 2010. Our mortgage was a forgiven in the bankruptcy and has not been reaffirmed. We continued to make payments on the house and are up to date on the payments. We have moved to another town and the house that was filed on in bankruptcy was going to be put on the market, however, we found out that if we sell it, we will actually be losing money.
4 ANSWERS
Credit Reports only report facts (that's the theory). Yes, a DIL can be reported.
Answered on Mar 07th, 2017 at 4:55 AM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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A deed in lieu on a debt which has been discharged in bankruptcy will not appear on your credit reports.
Answered on Mar 06th, 2017 at 5:17 AM
Even though a DIL will not appear on your CONSUMER credit report because of the bankruptcy, real estate lenders do post pertinent information on their insider credit reports about bad loans. So do not expect this information to be a secret from any future attempt you make to obtain real estate financing. Sounds like you are between a rock and a hard place, as your other option, foreclosure, will show up on the hidden reports about you as well.
Answered on Mar 03rd, 2017 at 5:42 PM
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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Let's think this through out loud. You did not reaffirm the debt on the house, so your payments, while credited to you by the lender, are not reported to the credit bureau. The underlying debt on the house (i.e. the mortgage note) was discharged. So if you should make a profit on the house, there is a good chance that you have a taxable capital gain. Generally the discharge of a debt in bankruptcy does not create taxable income, however. But would the ensuing profit on a sale create income that you cannot exempt under the rule giving a married couple a tax deduction of up to $500,000 in profit on the sale of a home? I am not a tax expert, and I strongly advise you to find an experienced one to help you resolve this question. My impression is that you can escape taxation on the first $500,000 of profit-but you'd better consult an expert.
Answered on Mar 03rd, 2017 at 5:42 PM