So, the question is “My home is in foreclosure and the bank has offered to do a deed in lieu,” but would a bankruptcy be better?
The short answer is: Well, it depends. (as usual)
The longer answer is:
A deed in lieu of foreclosure is a real choice where the home mortgage is the only debt you have. However, even when that is the case I’ve had clients who were offered a deed in lieu, but the creditor was still going to hold them liable for any deficiency (what is owed – what the property is sold at sheriff’s auction). My client, as advised my me, told them to forget it. We went ahead with the bankruptcy and eliminated all of their potential liability for the mortgage.
You also have to consider the tax implications of a deed in lieu. The IRS sees the deficiency forgiveness as a benefit to you and you will be required to pay taxes on the amount forgiven. Bankruptcy eliminates that requirement.
A deed in lieu of foreclosure stays on you credit report for only 7 years, where a bankruptcy stays on your credit report for 10. However, if you read some of the other blog postings here at Chris Wesner Law Office, LLC you will see that a bankruptcy filers credit is greatly improved after the first 18 months after filing.
If you are even considering a deed in lieu or bankruptcy, you need to talk to an experienced bankruptcy and foreclosure attorney immediately. Most, like Chris Wesner Law Office, LLC, offer a free initial consultation and can examine your situation a bit more closely to see what is right for you. I sometimes advise clients to file bankruptcy and sometimes advise them to do otherwise. You cannot tell what is the best course of action until you look at the entirety of a person’s situation. Speak to an attorney right away.
If you or your family needs to get out from a mountain of debt or protect you and your family’s future, you need to speak with an experienced, empathetic, and knowledgeable attorney like the ones at Chris Wesner Law Office, LLC. Give us a call to set up an in person or telephone conference for FREE. That’s right, FREE. Our initial consultation is 100% FREE, with NO STRINGS attached. There is NO FEE if you decide that bankruptcy is not for you. In fact, we OFTEN encourage our clients NOT to file bankruptcy.
Chris Wesner Law Office, LLC has offices throughout the Miami Valley including: Dayton, Xenia, Springfield, Troy, and Piqua with other offices expected to be coming soon like Sidney and Hamilton.