Posted on: 16th Apr, 2008 12:52 pm
i filed a chapter 7 bankruptcy last summer due to a business that failed. i lost my house as well in bankruptcy. i was forced to give it up because my husband on paper owned both our house and his parents house and since our house was not paid for and theirs was, i had to let mine go in the bankruptcy. i have been discharged since oct and i am just now (april) being propositioned with doing a deed - in - lieu. if i do, do the dil will i end up paying taxes on it next year? i don't think that i will, but i don't know and i want to make sure before i rush into any decisions. the other option is foreclosure. my credit is already shot because of the bankruptcy, but i need to know if i will have any tax liability with either option and if i do then which one is the better option for me? they have taken almost a year to start this so they can wait for me to decide which is better now. please help soon, i need to make a decision that hopefully is the right one.
Hi,
Welcome to the forum.
You cannot do deed in lieu on your own. The lender will have to agree for that. Certainly DIL is a better option because if the lender accepts the DIL then the lender will not asked you for the deficiency judgment but if you go for foreclosure then the lender may come after you for the deficiency judgment.
You need not to pay tax on the forgiven debt as the Government has provided the "Tax Break for Mortgage Debt Forgiveness"
Feel free to ask if you have any further queries.
Best of luck,
Larry
Welcome to the forum.
You cannot do deed in lieu on your own. The lender will have to agree for that. Certainly DIL is a better option because if the lender accepts the DIL then the lender will not asked you for the deficiency judgment but if you go for foreclosure then the lender may come after you for the deficiency judgment.
You need not to pay tax on the forgiven debt as the Government has provided the "Tax Break for Mortgage Debt Forgiveness"
Feel free to ask if you have any further queries.
Best of luck,
Larry
Welcome Curious101,
If you don't have good amount of equity then foreclosure will not help you.
Will you gain any amount after selling the property or will you still owe to the lender?
DIL and foreclosure have more or less similar effects on the credit but if the lender accepts the deed in lieu then he will not come after you for the deficiency judgment which is also mentioned by Larry above. And on above of that will need to pay the tax on the forgiven debt.
Let me know if you have any further quires.
If you don't have good amount of equity then foreclosure will not help you.
Will you gain any amount after selling the property or will you still owe to the lender?
DIL and foreclosure have more or less similar effects on the credit but if the lender accepts the deed in lieu then he will not come after you for the deficiency judgment which is also mentioned by Larry above. And on above of that will need to pay the tax on the forgiven debt.
Let me know if you have any further quires.
I filed Chap 7 Bankruptcy and my debt with the Bank that has my mortgage was discharged. I want to do a deed in lieu rather than going through foreclosure. The bank is saying they need to do an appraisal, title search. They took over the property in Jan 2010 after I wrote a letter saying I want to relinquish the property and to send me the paperwork for transferrence. Why would I have to go through all that--Couldn't we just do the paper work for the deed in lieu and be done with it?
i have the same question.
it is my understanding that the chapter 7 bankruptcy has discharged my 1st, 2nd and equity line. so now if i just let it foreclose, no one can come after me for any of it.
but if i now want to do a deed in lieu (to hurry up and get this over with), will that change their ability to come after me for the balance or taxes? will i have to 'reaffirm' the loan in order to deed it back to the bank? what about the 2nd that is with a different bank.
i hope someone has the answer.
thanks
it is my understanding that the chapter 7 bankruptcy has discharged my 1st, 2nd and equity line. so now if i just let it foreclose, no one can come after me for any of it.
but if i now want to do a deed in lieu (to hurry up and get this over with), will that change their ability to come after me for the balance or taxes? will i have to 'reaffirm' the loan in order to deed it back to the bank? what about the 2nd that is with a different bank.
i hope someone has the answer.
thanks