Deed in lieu or foreclosure vs bankruptcy

Guest

Okay I need some help. I want to make sure I understand.
My situation is I have a house in New York which has become a rental property as I have bought a townhouse and live in Georgia. I have lost a lot of money on the house in New York because of tenants not paying rent, the cost of maintenance and repairs. I have cleaned out all saving and maxed all credit. I will not be able to maintain so I now a trying to decide the best step to take. My understanding is if I do a deed-in-lieu I sign the house back to the bank the problem I have is I have a $37,000 line of credit not secured by the house and I assumed when I took the loan I could pay it back when I sold the home. But now the home is worth over $150,000 less then when I took the loan. I have also been told that I should just go ahead and let it be foreclosed on because then I can try to collect some rent while the foreclosure process goes through. I was also thinking of filing bankruptcy too to help wipe out the line of credit and credit debit. My main concern is I want to keep my house and car in Georgia.
Can someone please help with which would be better as far as deed-in-lieu vs. foreclosure and if I should just try to dig myself out of debt or just go ahead and file bankruptcy and then when before I get rid of the house or wait till the house is gone. Thanks!

jameshogg · Posted: Sun Nov 02, 2008 10:22 pm Post subject:

Hi MizzRea!

You have mentioned that you would like to save your house and car in Georgia. In that case, filing a Chapter 13 bankruptcy will be a better option for you. Both in case of foreclosure and deed in lieu, your property will be placed for sale and you will lose the property. Chapter 13 bankruptcy is also known as reorganizing bankruptcy. You will be able to save your property. The lender will give you an easier alternative plan through which you will be able to pay off the debts.

Thanks.

Niicss · Posted: Mon Nov 03, 2008 3:01 am Post subject:

Hi MizzRea,

If you are planning to chose between deed-in-lieu foreclosure and foreclosure, I would suggest you to go for a deed-in-lieu. This has a less effect on your credit. Moreover, the lenders may also forgive the deficient amount. In case the lender does not accept a deed in lieu application, you can file bankruptcy.

Thanks.

Guest

Our income, due to real estate has been reduced dramatically. We can no longer afford to make payments on condo or a lot. We can afford to pay on home. What should we do between allow the foreclosures, deed in lieu of foreclosures, or take bankruptsy?

jameshogg · Posted: Sun Nov 23, 2008 11:51 pm Post subject:

Hi amccall!

Are you talking about two separate properties here? You can apply to the lender for a deed in lieu foreclosure for the condo. The lender will sell the property in the market and try to recover the debts. If there is a deficient amount, the lender will forgive it. If the lender accepts a deed in lieu, you can then speak to the lender about short sale. It is similar to deed-in-lieu and the only exception is that you will have to pay the deficient amount. The affect on your credit will also be less if you go in for a short sale as compared to a deed in lieu.

Thanks.

Guest

how is your credit affected from a deed in lieu vs. a foreclosure
thanks

Niicss · Posted: Tue Jan 13, 2009 2:00 am Post subject:

Hi dave

A deed in lieu or a foreclosure will lower your credit score by 250 points. A foreclosure will be shown in your credit report for 5 years from completion date. You will only be able to purchase a personal residence between 5 and 7 years and you will have to offer a minimum of 10% down-payment. After 7 years, you can get mortgage at normal rates. A deed in lieu will remain on your credit report for 4 years from completion date. If you want to buy a property between 4-7 years of a deed in lieu, you will have to pay a 10% down.

Thanks

Guest

How long can I occupy the property after deed of lieu and when will be notified to move and the process?

jenkin7 · Posted: Thu Apr 02, 2009 11:50 pm Post subject:

Hi John,

This issue has laready been discussed on the following page:
http://www.mortgagefit.com/problems/deedinlieu-moveoutdate.html

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