Jan
02
Is Bankruptcy A Better Option Than Foreclosure For Me?
ByA Lis Pendens has been filed on the house (NY). An investor ’s short sale proposal was rejected. The lender is taking forever to get back to me to set up a meeting where we can talk about DIL. It doesn’t look as if I can raise enough privately to avoid foreclosure although I am still working on this as an option.
I heard that Chapter 13 bankruptcy was a common way to delay the foreclosure sale. I will try for pro bono legal advice locally but just for preliminary considerations, anyone got any thoughts (keep it simple please) on which is worse? .
4 Comments
January 2nd, 2010 at 4:57 pm
You are going to get range of opinions on this one.
Chapter 13 bankruptcy is the work out option. You enter into a repayment program to pay all your creditors, and that may go on 3 to 5 years. The bankruptcy will follow you making life difficult for 7 to 10 years. With a chapter 7, the Trustee takes all your property except for some basics and sells it, so you are going to lose your home anyway.
With a foreclosure, you can enter a repayment program after the auction, establish 2 years of prompt repayments and probably buy a new home with this credit record.
Clearly I am not an attorney. A specialist in loss mitigation or a non profit credit counselling office will discuss any possibility of debt consolidation programs as well as bankruptcy options and the effect of relevant federal and state law.
It’s a really major step to use Chapter 13 to delay the auction, you have time to sell your home or convince your lender a DIL is a better option. Don’t give up. Make a round of all the local realtors- you have listed MLS? Keep calling your lender, believe me the lender is much more motivated this year to consider forbearance, loan modification, a discounted loan ( short sale), an assumption if you can find a buyer to work that into the price, and finally a Deed in Lieu.
January 2nd, 2010 at 9:53 pm
try a broker a good one should have atleast one program that can help you out or offer private lending.
January 3rd, 2010 at 3:17 am
Hi. If you allow the property to go to foreclosure sale, you are legally responsible for the deficiency balance owed after the sale. The bankruptcy would: 1. postpone the foreclosure and 2. give you a discharge which means that you are not legal responsible for the deficiency balance owed.
January 3rd, 2010 at 7:52 am
I have worked with numerous foreclosure attorneys, bankruptcy attorneys and loan officers who all say one thing. Foreclosure is the worst possible thing on your credit. Worse than Chapt 7 or 13.