Bankruptcy

[bheath]

First off, thank you to everyone in the forums, i've read much of what is posted and it has been helpful.

Now, After paying off a car recently i decided i wanted something a little more family friendly.  I went and applied for  a car loan and after seeing my interest rates i decided i needed to take a couple months and try to repair some credit before making the purchase.  I started by opening two secured credit cards.  I figured with those and sending some requests for PFD on some small charge off acounts, maybe i would be able to get a few points better interest.  Obviously if these were the only problems, i wouldn't be considering the bankruptcy.  About 3 years ago, my girlfriend and i bought a house.  (I know, it was dumb)  After we split up, she convinced me to sign a quit claim deed on the property and she would refinance on her own.  She had 790 credit score and a great job, she also had all me stuff at the house, so i signed.  Didn't think it would be a problem.  I came to find out she never refinanced.  I called her up last week and she told me she's not going to refinance and that she forclosed on a rental property that she had and couldn't refinance if she wanted to.  So basically i was screwed.  This is 127,000 dollars on my credit report.  I'm a full time student on the GI bill and don't have a ton of income so you can imagine that any credit i could get now or in the future is going to be affected.  I'm in school for chemical engineering and plan to have financial freedom (for the most part) after i graduate.  However when i graduate school in about three years, depending on how many co-ops i do, this is still going to be there.  In fact, it could be there for the next 27 years.  I have done much research into my options in getting removed from the mortgage, however, it looks very much like i'm at her mercy.  Do i cut my losses and file bankruptcy to remove my name and spend the remainder of my time while im in school to try to build my credit back up.  Or do i continue trying to rebuild what i have and hope that some miracle happens and she sells the house.  I forgot, she also mentioned something about her possibly filing bankruptcy herself, this would leave me with the entire debt, with no rights to the property and eventually a forclosure.  I know that all my actions were stupid, very stupid.  But now what do i do?

Thanks for any help and feel free to let me know that i better learn a lesson from this.

[Comet21]

I am not sure of what a "Quitclaim Deed" works legally, but aren't you giving away your rights and responsibilities of the property? Are you still liable at that point? If so, why would anyone ever sign it. If I were you and I am sure mostly everyone on this board would suggest speaking with a BK attorney first. The consultation is usually free. I would not file BK so quickly if this is the only debt you are concerned with. With a home you have options. Have you tried selling, a short sale, modification, etc. BK will scar you for a lot longer than forclosure that may not even be liable for. Speak with an attorney that can better explain the Quickclaim deed first and to see if you are still liable. 

[bheath]

Unfortunately I am completely responsible for the for the debt but have no rights to the property.  It's similar to being a cosigner, however i'm a co-borrower.  A quit deed claim is common in divorces and such when a person gives up their rights to the property and the loan is refinanced soley to the other borrower.  You say that i shouldn't if this is the only debt i'm worried about.  However, this debt is 127000 dollars that i cannot clear.   I do not own the home and will not be able to get a mortgage myself as long as there is a large amount left on that one.  She can file bankruptcy or lose the house.  It's not so much of which is worse, forclosure or bankruptcy, i have no option for forclosure.  I only have the option of bankruptcy or stay at her mercy.  I can rebuild my credit from where it is now, but if she were to not pay, it will all be for not.

[rena347]

I would advise consulting a bankruptcy attorney. It sounds like this house mortgage is a huge worry for you. Not only are you liable for the entire $127,000. If she would make late payments those would go on your credit report also. You could have this issue hanging over your head for years to come. If it's true that she has had one house foreclosed on, there is no way she could refinance this mortgage and she could eventually have this house foreclosed on or even file bankruptcy. I think you are right to worry about the long term damage of this mortgage on your credit rating. If you filed bankruptcy now, you would have three years to rebuild your credit and maybe be on the road to financial success when you graduate. I would not hope for a miracle from your ex. She has already reneged on her promise to refinance so she doesn't seem very reliable. Definitely make an appointment to talk over your issues with a bankruptcy attorney. I think the first appointment is usually minimal amount. You could always call and ask how much an appointment would cost. You would get peace of mind from having a professional look at your situation.

[ihatemyscore]

I would just BK, everyday you wait.. Your waiting a day longer to put all of this behind you.

[Comet21]

Unless there is more accounts that he has no talked about then it is way too early to file BK. has she already stopped making payments? What if she comes into a windfall of money? What if she sells the house? Then you have filed BK for 1 account that did not call for it. Your stuck with BK and the house is being paid for. Now obviously you know the situation better than I do, and you are doing the right thing by exploring all options. But if she is still making payments then it is not the time to file.

[bheath]

Comet21,

You could be very right.  However, if in 3 years i want to purchase a house, i will not be able to because a bank is going to view that account as a responsibility and i would have to be able to prove that i can pay that 1150 dollar mortgage plus the one that i am applying for.  If I wait until then and then decide that i have to file.  I would be starting from square one.  So the reason i brought to the forum is to see what the opinion is on if i should hope for the miracle or get it over with now. 

[bheath]

rena347,

I believe that is good advice.  Thank you.

[Comet21]

You are right about that. But a BK is going to stain you for a while and I did not want that to be your 1st option. Explore everything but if your ex-girlfriend files don't be the last person on the Titanic.

[StartingOver10]

This is more complex than just filing a BK to solve your problem.

If you file a BK and are successfully discharged then you are no longer responsible for the debt. But, when you have a home the process involves not only releasing the debt (which can be done thru a BK) but releasing the lien. If your previous GF still has the house and is not making payments, then sell the house.  Convince her to sell it. If it is a short sale it is better than having a BK. If she and you file BK, then the house still has to have the lien released either through Deed in Lieu, Short Sale or Foreclosure. You can get a new mortgage, but the waiting time period to get a new will run from the last date - either the time you are discharged in BK (if that is last) or the time the foreclosure/short sale/deed in lieu is transferred to the new owner. There are vastly different time periods depending upon the new mortgage you will be seeking when you purchase: FHA, USDA, VA or conventional.

If you interview some attorney's make sure to mention that you QC'ed the deed and bring a copy of the QC deed with you. In fact, did you or some other person prepare the QC deed or did a real estate attorney prepare the deed?  I am only mentioning this because I see all kinds of QC deed's prepared inaccurately that have to be corrected prior to actually releasing the party involved and prior to selling the property. There are very common errors made on these types of deeds that do nothing but mess up the title.

Speak to a couple of attorney's about your situation. The first attorney you should interview should be a real estate attorney, not a BK attorney. Have him check the title and your QC deed. Then interview BK attorney's. The two types of attorney's have different knowledge bases and one should not give advice for the other - KWIM?