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BANKRUPTCY VS. DEED IN LIEU OF FORCLOSURE

Posted on: 31st Aug, 2009 10:09 pm
log cabin 20 years old, severe structural issues
stimulus team unable to help"sallie mae original loan"
allstate insurance denies claim
awaiting answer from bb&t loss mitigation team as to wether a portion of our mortgage owed can be forgiven in order to rebuild the house from the foundation up
lawyer told us it would be in our best interest to file ch.13 and include the mortgage
what are the ramifications both tax and credit wise and do you think this is a good idea?
hi victmcga,

if you file chapter 13 bankruptcy, then the lender would give you a payment plan to pay off the dues after your bankruptcy is discharged. as far as credit is concerned, it would be lowered by 200-250 points.

in my opinion, it would be better if you could apply for a deed in lieu of foreclosure with your lender. this would be a better option to get rid of your property. you can surrender the property to the lender who would sell it off and recover the dues. however, the deficient amount resulting from the sale of the property would be forgiven. thus, the lender would not be able to sue you for the deficient amount. it would lower your credit score by 250 points.

take care.
Posted on: 01st Sep, 2009 03:16 am
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