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  1. #1
    Join Date
    Oct 2007
    Posts
    1

    Default Does Surrendering Property in Bankruptcy Always Mean Foreclosure

    State of California and Arizona.

    Premise: I dont want to keep the properties.

    I have two properties and am filing bankruptcy. I do not wish to keep the houses, but I do not want both a Bankruptcy and two Foreclosures on my credit.

    There seems to be conflicting information as to whether or not this will happen. My lender claims that as long as I continue to make payments throughout the Bankruptcy process, when my debts are discharged, and the BK is approved, there will be no foreclosure on the house.

    He claims however that if I go more than 45 to 60 days without paying, and my status is "in default" ... they can request a stay on the bankruptcy proceedings, have it lifted, and then put my house into foreclosure.

    My bankruptcy attorney says there will be a bankruptcy and two foreclosures no matter what, and that its "Complete BS" that continuing to pay will avoid this. He thinks the lender is just trying to get me to continue paying.

    Obviously I need to know the correct answer to all of this.

    1) If you have two properties and you include them in the Chapter 7 bankruptcy, do you end up with 1 bk and 2 foreclosures on your credit?

    2) Is there any merit to the statement that its dependent upon whether I continue to make my payments or am in default at the time my debts are discharged?

    Thanks

  2. #2
    Join Date
    Sep 2005
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    Behind a Desk
    Posts
    98,846

    Default Re: Does Surrendering Property in Bankruptcy Always Mean Foreclosure

    Foreclosure is the process your lender will use to clear your interest and gain the legal right to sell your property. So unless your lender is intending to request some form of conveyance by you to them, I'm with your lawyer on this one. I suspect the lender is trying to get a few more months of payments out of you that they will otherwise lose.

    Each foreclosure is separate.

  3. #3
    Join Date
    Jul 2006
    Location
    Ohio
    Posts
    1,126

    Default Re: Does Surrendering Property in Bankruptcy Always Mean Foreclosure

    The foreclosures won't be on your credit. Once you file BK, no additional information about the properties will be disclosed on your credit report, whether you keep the properties or not. BUT, the banks still have to go through the foreclosure process until they allow a short sale or deed in lieu.

    --per LadyNRed.

  4. #4
    Join Date
    Mar 2005
    Location
    Michigan
    Posts
    28,906

    Default Re: Does Surrendering Property in Bankruptcy Always Mean Foreclosure

    The key issue apparently being, the outcome is the same whether or not payments are made after the bankruptcy is filed.

  5. #5
    Join Date
    Jul 2006
    Location
    Ohio
    Posts
    1,126

    Default Re: Does Surrendering Property in Bankruptcy Always Mean Foreclosure

    Quote Quoting aaron
    View Post
    The key issue apparently being, the outcome is the same whether or not payments are made after the bankruptcy is filed.
    Exactly. Sorry that I didn't clarify. One time payments after BK has no effect on your credit. The foreclosure has no effect on your credit, after BK.

    Apparently, the time frame for the foreclosure in your state is about 180 days. I forgot to add that earlier.

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