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Please explain how bankruptcy including house works..

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jenrhi
New Contributor

Please explain how bankruptcy including house works..

Filed a chap 7 bankruptcy and included my house in 9/08-the loans shows on my credit reports as discharged and one lender told me that because the house has not been foreclosed and the deed is still in my name, that technically it is still mine and therefore my only option is to try and get a conventional loan, though in reading some other posts, it seems that maybe I could go FHA depending on how it reports on my credit bureau.

 

Can anyone shed some light?

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StartingOver10
Moderator Emerita

Re: Please explain how bankruptcy including house works..

The lender needs to complete the foreclosure on your house. The BK gets rid of your personal liability to repay the mortgage, bu the lender actually has to complete the foreclosure to get the collateral.

 

Since it has been so many years, get in touch with the lender and offer a Deed in Lieu so you can get the property out of your name. Have you been making the payment in the meantime? If so, then this is why they haven't completed the foreclosure. If not, have you contacted them to find out what is happening? Have you moved from the property?

 

If they won't accept a DIL, then do a short sale. Even though you have a BK, you can short sale the property and complete that release of lien. Then you will be able to get a new mortgage after the appropriate time (2 to 3 yrs for FHA and 5 to 7 yrs for conventional)

Message 2 of 3
jenrhi
New Contributor

Re: Please explain how bankruptcy including house works..

I contacted the banks attorney last year to attempt a deed in leui of (this loan was through USDA), I faxed all the paperwork to start the process and the attorney basically said, 'with the state of the economy and so many homes in foreclosure status, there is no big rush for this to be done'

 

I did attempt a short sale, even had an offer in writing, unfortunately the neighboring business filed a land dispute over the driveway access and no one wanted to deal with him. It was a nightmare to say the least

 

The house has been empty for 3 years, I have not been paying anything on the loan and they havent even started the process yet. From everything I have read there is nothing I can do t oforce them to take it back. So I am stuck in limbo land.

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