Posted on: 17th Jan, 2010 07:11 am
I will be filing chapter 13 within the next 2-3 months. I have a rental property that I want to do a Deed in Lieu of. Is there a benefit to file the CH:13 first then do the deed in Lieu?
Welcome rcatc,
If you file chapter 13 and include the home loan into it, then you would be able to save the property as the lender will give you a repayment plan to pay off the dues. You'll be able to clear the mortgage dues within 3-5 years and save the property.
If you want to get rid of the property, then you can apply for a deed in lieu of foreclosure now. Your property will be sold off and you won't have to pay the deficient balance.
If you file chapter 13 and include the home loan into it, then you would be able to save the property as the lender will give you a repayment plan to pay off the dues. You'll be able to clear the mortgage dues within 3-5 years and save the property.
If you want to get rid of the property, then you can apply for a deed in lieu of foreclosure now. Your property will be sold off and you won't have to pay the deficient balance.
My concern is the tax consequences. I understand I will receive a 1099 and have to pay taxes of the deliquent amount. does filing BK before or after make a differnece in a deed in lieu of.
If you file a deed in lieu, your deficient amount resulting from the sale will be considered as your income. Depending upon the Mortgage Debt Relief Act, you will not have to pay taxes on that forgiven amount. If you plan to apply for deed in lieu after bankruptcy, it would depend upon the lender's discretion whether or not he would accept it. However, if he accepts you won't be liable for the deficient amount as you won't be personally liable for the loan.