Bankruptcy or Deed in Lieu

[JerryMiles]

I am about to have my home foreclosed on in 3 weeks. I am contemplating a bankruptcy or a deed in lieu of foreclosure so I don't have a foreclosure on my credit. However I can't afford this house anymore. What good would a BK do for me? An attorney suggested it and of course he was a bankruptcy attorney. Will that just buy me time? Can I do the deed in lieu myself? Or should I just turn out the lights and move on shutting the door and the closing this chapter of my life?

Thanks,

Jerry

[Moe Bedard]

Jerry,

It look like you're ready for whatever comes your way and I commend that because what is, IS.

I know this question is directed at an attorney and I am no attorney, but my non legal advice would be to do a deed in lieu of foreclosure if you can. I know your credit is not great and a foreclosure would make this a 7 year+ tail on your credit report if you just walk away. You cannot afford it (you obviously have come to grips with that) you don't have time to sell. Now it's time to do damage control and save what little credit you have left.

I always advise homeowners to try and save yoru home and if that fails, then try to do what you can not to that foreclosure mark on your credit. Bankruptcy too. Why do that when you know all yoru doing is buying time? Just spend that money on a deposit for a new rental and take your time, regroup and work at restoring your credit.

Long answer, sorry.

[Paul M.]

A bankruptcy can stall the foreclosure, but only for a short time, and if it was done with the sole intent of forestalling, it could cause a problem for you. Bankruptcy is a last resort and makes sens when your bills, not just the mortgage but car loans, credit cards, and everything is just too much. Your credit gets wrecked, and you become a renter. In this market renting might not be a bad deal... rents are cheap, and the first few years of a mortgage are interest only payments anyway so you really just rent with a mortgage. You don't pay property tax or insurance and have no property upkeep expenses, so you could regroup your funds and get a fresh start.

- Paul

[ForeclosureAttorney-SC]

File Bankruptcy if you want to keep your house and have the financial means to make payments through the Bankruptcy Court to bring your loan current.

A Deed in Lieu has to be approved by the Lender, many do not accept DILs. The Lender or its attorney will supply you with the DIL documents. If you have a second mortgage, tax liens, judgments, etc., you will not be approved.