Foreclosure/ Chapter13?
by Mortgage Rates on Saturday, September 25th, 2010 | 2 Comments
-
Mortgage Info
-
Updates
-
Useful Links
-
-
Tags
2010 About article Auctions bank banks best Business buyers change Credit Debt Equity Financial First fixed Foreclosure From good Government Help Home house Housing interest Loan Loans Market more Mortgage Mortgages Need News options qualify Rate Rates refi refinance Refinancing should this Time variable would-
Meta
if I file chapter 13 bankruptcy will that stop foreclosure proceedings
YES
can I still sell my house to someone else while in chapter13?
NO
Also when is the chapter 13 “official” enough to stop the forecloure?
THE DAY YOU FILE WITH THE BANKRUPTCY COURT.
Before choosing to go with the foreclosure, you should look into a few other options first. Refinancing is the option that most homeowners attempt first, but credit/income and tighter lending have precluded most homeowners from qualifying for a loan right now.
Either way, you should list the house on the market just on the off-chance someone wants to purchase it before the foreclosure goes through. You can also try to work with the lender for a short sale, where you’d sell the property for less than what you owe on it. At least it will pay off the loan and save your credit a bit.
If that doesn’t work, ask the lender about giving a deed in lieu of foreclosure. That works as just giving the property back to the bank, and they can’t go after anything else. They accept the deed instead of foreclosing or paying the loan, so there’s nothing else for them to go after. This is only slightly better than a foreclosure, but anything you can do to preserve your credit will help at this point.
It will depend on how the bank pursues the foreclosure if they can sue you for another judgment and go after any other assets. With just the foreclosure, though, they are not entitled to anything else. You pledged the house as collateral for the loan — not your car, 401(k), or prize racehorse. So all that they can take as payment for the loan is the house.
Look up California’s state foreclosure laws and consult your loan documents to determine what kind of foreclosure the bank can proceed with (Judicial or Non-Judicial). That will tell you if they can sue you afterwards and try to go after any other assets.
Banks rarely sue for deficiency judgments, though, since they know that foreclosure victims don’t have a lot of extra cash or even the ability to borrow any money. It costs the lender extra time to sue you and there’s no guarantee they’d be able to collect on the judgment, so most don’t bother with the judgment at all.
Hope that helps.
ForeclosureFish
http://www.foreclosurefish.com/...
Source(s):
Short sales: http://www.foreclosurefish.com/blog/inde...
Deed in lieu of foreclosure: http://www.foreclosurefish.com/deedinlie...
California foreclosure law: http://www.foreclosurefish.com/ca.htm...
Deficiency judgments: http://www.foreclosurefish.com/blog/inde