QUESTION
Is there a foreclosure alternative 4 years after a Chapter 7 bankruptcy?
Asked on Jul 25th, 2013 on Bankruptcy - California
More details to this question:
We went through a Chapter 7 bankruptcy in 2009, then found out just recently our home was included and our loan was not reaffirmed. We have been faithfully paying all this time and only found out when we tried to refinance a few months ago. The mortgage balance is 90k and the house is probably only worth 45k in today's market, so we're definitely underwater. I understand we can walk away with no personal financial penalties. However will a foreclosure be on our record if we surrender the house and make it difficult to obtain another mortgage? Is there another option in lieu of foreclosure like a short sale and would a short sale affect our credit negatively?
8 ANSWERS
Bankruptcy Attorney serving Florissant, MO
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Law Offices of Thomas Corcoran Phipps
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A short sale will not have as bad an effect on your credit as a foreclosure would. I would talk to the mortgage company about doing a short sale.
Answered on Aug 12th, 2013 at 8:13 PM
Whether a foreclosure will appear on your consumer credit report will depend on whether your foreclosure proceeds by a judicial process (where it will appear as a public record) or by the alternate notice process, where bankruptcy law will prevent the lender from reporting it. Unfortunately, when you apply for another mortgage, prospective lenders will have access to the prior foreclosure in either way because they do not just rely on the consumer credit report to make a lending decision. A short sale could be a better option and would not appear on your consumer credit because of the bankruptcy laws. However, it is possible that a short sale could appear on an insider's review of your credit worthiness when applying for a new mortgage loan. Unless you are in the mortgage industry, there is no way for a lawyer representing consumers to know what an insider report might include. And I wouldn't be surprised to find that a loan application specifically asks if you have had a short sale or deed in lieu, which you must answer honestly.
Answered on Jul 31st, 2013 at 10:24 PM
General Law Attorney serving Cherry Hill, NJ
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Mark S. Cherry, Attorney at Law, PC
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The bankruptcy discharge should have stopped the credit reporting of the mortgage note. Pull your credit reports to see if the house appears. You should explore options with the lender such as modification (HAMP or Traditional), short sale, deed-in-lieu, or a program called HARP (to refinance an upside down mortgage). Also, there are a few HUD mortgage programs available to people who have been foreclosed.
Answered on Jul 31st, 2013 at 10:24 PM
Bankruptcy Attorney serving Plantation, FL
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Moffa & Breuer, PLLC
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This is more of a credit question, but if your debt on the house was discharged, then the foreclosure should not count on your credit score because you don't owe anything.
Answered on Jul 31st, 2013 at 10:24 PM
Yes, if you let the house go through foreclosure that will be on your record. You should be able to qualify for a mortgage about 2 years after the foreclosure. Or, yes, you could sell the house in a short sale and that would shorten them time you would have to wait to get a mortgage. The third option is to sign over a deed in lieu of foreclosure.
Answered on Jul 31st, 2013 at 10:23 PM
Personal Injury Attorney serving Glendale, CA
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JT Legal Group
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If you're right about what you're saying, the foreclosure will not be listed on your credit report. I have a feeling you're not right about it. Also, why in the world would you keep a house worth 45k when your debt is 90k? Can't you rent instead and come out ahead?
Answered on Jul 31st, 2013 at 10:23 PM
Bankruptcy Law Attorney serving Austin, TX
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Law Office of Susan G. Taylor
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I don't think your credit can be affected in any event, and I don't think you'll have a foreclosure on your record.
Answered on Jul 31st, 2013 at 10:07 PM
Trusts & Estates Attorney serving Camarillo, CA
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Law Offices of Larry Webb
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Foreclosure, short sale, bankruptcy.
Answered on Jul 31st, 2013 at 10:07 PM