Legal Question in Bankruptcy in Minnesota

Bankruptcy or Deed in Leu and Pre-Filing Asset Planning

I own a second house in VA which I have been trying to sell. I have negative equity in the house, so at this point I am just trying to be rid of it. I have had several contracts on it, but they keep falling through for a variety of reasons. As I continue to pay a second mortgage, I am trying to figure out how to get rid of this mortgage (and the house). Besides this house, my debts are under control and I have no problem making any loan payments. I don't have a debt problem, I have a house problem that is becoming a debt problem. If my bank refuses to accept a deed in leu of foreclosure, is a bankruptcy filing my only option for discharging this debt. I would even be happy paying some of the estimated shortage between sale proceeds and loan balance, but the open-ended payments are killing me.


Asked on 4/07/98, 3:04 pm

2 Answers from Attorneys
Daniel Press Chung & Press, P.C.

Deed in lieu still harms your credit

Even if the lender accepts a deed in lieu of foreclosure, it still goes on your credit report as a default. The only way to keep your credit report clean is to keep paying on time on the mortgage or sell the property andbring the deficiency to the table at closing so that the loan is paid off in full.

If you don't care about your credit, you cantry to work something out with the lender, oryou can file bankruptcy or just let them foreclose and come after you for the balance.

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Answered on 4/18/98, 5:03 pm
Charles Dobra Charles Wm. Dobra, Ltd.

Deed in Lieu of Forclosure

If you negotiate a deed in lieu of forclosure, it is likely that this will go on your credit report. However if you have no choice, and the bank will take a deed, make sure that your agreement releases you for any and all liabilities that you incurred under the terms of the note, including, but not limited to, professional fees. CONSULT A BANKRUPTCY ATTORNEY!

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Answered on 4/21/98, 6:59 pm


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