Letting house go without filing for BK???

[blucat13]

I have been investigating Ch 7, but I make too much over the median and my lawyer is concerned about whether I could pass the means test, and they would probably force me into Ch. 13. I can pay my CC off myself within 5 years myself and save the lawyers fees and credit ding, but I cannot manage with my current house payment. I can't sell my house, so I was originally hoping to surrender through Ch. 7. If I don't file BK in Ch 7 or 13, it will have to go through the foreclosure process.

1. Do I have to have a lawyer to get me through that process?
2. What are the chances I will get sued for deficiences and court costs? I have no assets, other than about $1000 equity in my car. House (if it sells at all) will likely sell for about $15K less than I owe.

Countrywide is my lender, and I already asked about deed-in-lieu, but they said the house has to be on the market for 3 months AND have an offer on it before they will 'pre-qualify' you for deed-in-lieu.

Any thoughts are welcome...

Tami

[justbroke]

. Do I have to have a lawyer to get me through that process?

No. You could just get served the summons to appear, and ignore it. The court would enter a default judgment, set a sale date, and then you'll be notified. Then after the sale, you'll be told to quit/vacate. If you don't, the Sheriff will help you move your stuff onto the sidewalk.

2. What are the chances I will get sued for deficiences and court costs? I have no assets, other than about $1000 equity in my car. House (if it sells at all) will likely sell for about $15K less than I owe.

First, this depends on what State the property is in. Some States have great anti-deficiency laws for purchase-money mortgages.

Countrywide is my lender, and I already asked about deed-in-lieu, but they said the house has to be on the market for 3 months AND have an offer on it before they will 'pre-qualify' you for deed-in-lieu.

Right, the Banks want nothing to do with a home that no one even attempted to sell.

You can let it foreclose, but this will be a big ding on your credit. Foreclosure is a lawsuit and will be in your Public Records portion of your credit report, as well as the mortgage being marked negatively.

[r.m]

[Countrywide is my lender, and I already asked about deed-in-lieu, but they said the house has to be on the market for 3 months AND have an offer on it before they will 'pre-qualify' you for deed-in-lieu.]

I've seen DIL's go through without the offer contingency.

However, CW services a lot of different investors.

You also need to have clear title- no seconds, other liens or other technical problems.

A DIL's going to "ding" your credit just as much a FC... only thing you'd be accomplishing is possibly getting out of a deficiency problem.

This assumes they don't want you to sign a note.

[blucat13]

That's the reason for the deed-in-lieu - in most cases they don't come after you, which is why it's better than a foreclosure. In some cases that saves them money, because they don't have to go through costs associated with foreclosure and court, etc.

I've done a deed-in-lieu once before, many years ago in Nevada when gold dropped to about $200 an ounce. We were in mining, and in a tiny town in the middle of nowhere where the only industry was mining. Everyone was leaving, so there was no one to buy the houses that were for sale. Our house was on the market for a year (we had moved to KY during that time) so we asked them about deed-in-lieu. Since they had SO many foreclosures in our town already, they were willing to deal and write off the deficiency. Interestingly, it never showed up on our credit report either.

I'm not too concerned about the credit hit, because WHATEVER I end up doing is going to be a bad hit, it seems like all the options are bad. Deed-in-lieu has the least likelihood of me getting sued.

They may be more willing to deal once the mortgage is late a couple of months.

[No Gravy]

Since they had SO many foreclosures in our town already, they were willing to deal and write off the deficiency. Interestingly, it never showed up on our credit report either.

You got *lucky*, at least in the respect that it never showed on your credit.

Do you / can you have another place to live? If so, and you're able to accept the CR consequences (or if you have no choice in the matter), then it seems like a plan to me.

My opinion is that down the road, foreclosures on credit reports will be viewed less harshly than they have been in the past. But as others have said, you still risk being sued on the deficit unless the lender is willing to play ball.

My experience with Countrywide was not memorable in a good way. :-/

Is it a possibility to put your home on the market, even in "name only" for a few months? You mentioned that they might be more willing to make a deal if you were several mortgage payments behind, and that's probably true, though if you can avoid that, I would.

Think long-term, and don't throw good money after bad, but at the same time know the risks your actions will carry.

[KatInVa]

Tami, just found your post after posting one similar.

Never heard of deed-in-lieu???