Legal Question in Bankruptcy in California

Re: Foreclosure/Bankruptucy

The lender will not accept the house by your simply deeding it back to them because under California law you would have a right to change your mind for up to one year afterwards--it is called the right of redemption. This right prevents a title insurer from insuring title for a year, so if a lender took it back by your deed, they would have to wait at least one year to resell it. Another reason is that when you deed a property back to a lender, it comes back with any judgment liens, tax liens, etc, still attached to the title; on the other hand, if the lender does s trustee's sale foreclosure,they will "wipe out" any liens which recorded on the title after they made you their loan and it wipes the slate clean--this procedure is much more advantageous to the lender. With respect to bankruptcy,it never ceases to amaze me that people take legal advice from realtors who often have little or no formal education and know next to nothing about the law. A chapter 7 bankruptcy will do nothing for you as the lender will get relief from stay and go forward with their foreclosure--all it does is cost you more money and make the lender angry. A chapter 13 may help you if you are going to come into some money in the near future or are able to double up or pay extra on your loan payemnts each month until the loan in default is current; if you cannot, this is a waste of time.