What does it mean to "Put my home into my CH7?"

[technoreid1]

What does it mean to "Put my home into my CH7?" My attorney said he will include my home in the BK7....

My attorney said that the home still goes through the foreclosure process even though it is "included in my BK7"......

I guess my question is this: what advantage to me is there to "include my home in the BK7" if it still has to go through the formal foreclosure process?

(I am assuming 100% relief of debt)???


thanks, techno

[brokenbuthealed]

Correct. If your home goes through foreclosure and isn't included in bankruptcy the lender could still come after you for a deficiency judgement if the amount they recover is less than the amount you owed.

[Duke89]

Two items you should be aware of. First, even though your house might be foreclosed on you would still be personally liable for any amounts not recovered during the foreclosure process (this is called a deficiency). This amount would also include the costs of administering the foreclosure process including attorney's time. The bank would simply get a default judgement against you and then attempt to collect their money via that vehicle. Most judgements are good for 10 years (in Texas) and can be renewed every 10 years so they never really go away. You could be haunted for a very long time. Second, if you were lucky enough to get a lender who decided not to bother with pursuing you for any deficient amounts the amount of debt that they "forgive" would become taxable income to you in the eyes of the IRS (I believe that Congress has provided some relief to taxpayers so this is not an issue this year, but in most years this is a very real danger). The last thing you want is to agonize over losing your house and then find out later that you have a nice tax bill to boot for your trouble. Filing bankruptcy and surrendering your house is the "magic bullet" that takes care of this for you if you can no longer afford your home.........you give your house back and the court wipes away the lender's ability to pursue you for any shortages that arise AND the bankruptcy also prevents the IRS from considering the debt you were forgiven as taxable income. If you are surrendering your house in bankruptcy the foreclosure aspect of the issue is merely the legal process that the lender must go through in order to remove you from the position of legally owning the house.......they cannot auction it off if it is still in your legal possession.

[technoreid1]

Two items you should be aware of. First, even though your house might be foreclosed on you would still be personally liable for any amounts not recovered during the foreclosure process (this is called a deficiency). This amount would also include the costs of administering the foreclosure process including attorney's time. The bank would simply get a default judgement against you and then attempt to collect their money via that vehicle. Most judgements are good for 10 years (in Texas) and can be renewed every 10 years so they never really go away. You could be haunted for a very long time. Second, if you were lucky enough to get a lender who decided not to bother with pursuing you for any deficient amounts the amount of debt that they "forgive" would become taxable income to you in the eyes of the IRS (I believe that Congress has provided some relief to taxpayers so this is not an issue this year, but in most years this is a very real danger). The last thing you want is to agonize over losing your house and then find out later that you have a nice tax bill to boot for your trouble. Filing bankruptcy and surrendering your house is the "magic bullet" that takes care of this for you if you can no longer afford your home.........you give your house back and the court wipes away the lender's ability to pursue you for any shortages that arise AND the bankruptcy also prevents the IRS from considering the debt you were forgiven as taxable income. If you are surrendering your house in bankruptcy the foreclosure aspect of the issue is merely the legal process that the lender must go through in order to remove you from the position of legally owning the house.......they cannot auction it off if it is still in your legal possession.

I appreciate all your help!

Thanks! techno