Timing of BK / Foreclosure

[enuffznuff]

I've read several other threads on but I'm not seeing a clear answer (Maybe because there isn't one)
My house is in default, it's listed for sale.
Got notice of foreclosure from the first mtg, sale set for early next year. There is also a second on the home. The second was taken out after the fact (not part of the original purchase) and so they can come after me personally for deficiency.

So, Looks like, unless we get an offer in the next 2 months, we're going to have to do a BK.
Question: Is it true that it is advantageous to file PRIOR to the sale so that the house is surrendered in the BK and therefore you don't have a Foreclosure followed by a BK on the record? Or does it matter?
TIA!

[tobee43]

actually, what your next move is, will depend on the outcome of the situation. i would first decide if your planning on keeping the house or not whether you are going to be filing or not. then take it from there

it's kinda like who's on first with your actual question....the answer is...drum roll please....

if you file prior to the foreclosure, it will then go on your credit as a foreclosure.
if you file after the foreclosure it will go on looking as IIB....whopee i guess...

we did it after the foreclosure process...or let me re phase that....the house is IN foreclosure, however the bank has NOT foreclosed. we did have a summons and a docket number so we listed that on our petition....our cr says IIB...chase balance 0....so at this point we see nothing about the foreclosure....and IF they or let's again reword this...WHEN they finally foreclose they better NOT list it again as it's already a discharged debt...but do we really care...nope...they will both be lingering about for we are certain quite a while on our credit reports.

personal bottom line....coming only from our experience THUS far...it really hasn't matter, our home was for sale the entire time until we left it and the contract was up with the realitor. in fact, the bank has been sitting on it over 2 years and has not even put it back up for sale??

[Panacea]

Wait, now I'm totally confused (sorry for butting into the thread)

I have a mortgage and a helco (that was taken out after I got the mortgage)

I am surrending the house but not in foreclosure yet...filing this week (maybe it'll be done today)

Won't the eventual forclosure (any deficencies), and heloc be wiped out with the BK?

Whats IIB?

[researchnerd]

IIB = Included In Bankruptcy. This (along with a $0 balance) is what should appear on your credit report for all debts you include in your filing.

[tcreegan]

Hi all, Hi enuffznuff,

A foreclosure sale rarely gets the full value of the home, so you will likely end up w. a deficiency there too.

Don't make BK decisions based on your credit report. After the BK you can clean up your reports and do some simple credit building, nothing during the BK is going to make much difference.

What most folks do is file BK, which stalls the foreclosure process, and live in the house payment-free, putting the savings to use building their post-Bk life.


Hi Panacea,

Won't the eventual forclosure (any deficencies), and heloc be wiped out with the BK?

Yes

Tom in Colo

[enuffznuff]

Let me clarify:

The decision about BK has NOTHING to do with my credit report.
I no longer live in the house, so that's irrelevant.

If the house doesn't sell by January, the foreclosure will happen. It is already 'in' foreclosure, it simply is not completed yet.(Sheriff's sale is already set, as I mentioned in the OP).

There will be no deficiency on the first mortgage, in my state there is no recourse for 1st mortgages. The first leinholder is foreclosing and will almost certainly be fully paid, but even if they aren't, it doesn't matter. They can't collect the deficiency. I am versed in the laws regarding this in my state. However, second mortgages are only protected (non-recourse) if they were taken out at the time of purchase for the original financing of the home, and mine was not. Therefore, there will be a deficiency from the second mortgage. This will force the bankruptcy. (To wipe out the deficiency, which is precisely the point.) Has nothing to do with my credit report.

My question is simply regarding the TIMING of filing, if anyone is aware for sure whether filing prior to the Sheriff's sale will result in ONLY the IIB listing being on the credit report as opposed to a Foreclosure AND BK being listed on the credit report.
This in no way impacts my decision to file or not to file, but there's certainly no reason not to do something regarding timing that is advantageous, if it can be done.

[debee]

File bk before the sale. Then the subsequent foreclosure will be IIB on your credit report. That's my understanding.

[tobee43]

Let me clarify:

The decision about BK has NOTHING to do with my credit report.
I no longer live in the house, so that's irrelevant.

If the house doesn't sell by January, the foreclosure will happen. It is already 'in' foreclosure, it simply is not completed yet.(Sheriff's sale is already set, as I mentioned in the OP).

There will be no deficiency on the first mortgage, in my state there is no recourse for 1st mortgages. The first leinholder is foreclosing and will almost certainly be fully paid, but even if they aren't, it doesn't matter. They can't collect the deficiency. I am versed in the laws regarding this in my state. However, second mortgages are only protected (non-recourse) if they were taken out at the time of purchase for the original financing of the home, and mine was not. Therefore, there will be a deficiency from the second mortgage. This will force the bankruptcy. (To wipe out the deficiency, which is precisely the point.) Has nothing to do with my credit report.

My question is simply regarding the TIMING of filing, if anyone is aware for sure whether filing prior to the Sheriff's sale will result in ONLY the IIB listing being on the credit report as opposed to a Foreclosure AND BK being listed on the credit report.
This in no way impacts my decision to file or not to file, but there's certainly no reason not to do something regarding timing that is advantageous, if it can be done.

it is suppose to not be listed as a foreclosure provided you file first...is this in fact actually advantageous?? once again only if you are dealing with a deficiency...as i previously stated..however, i understand there are no guarantees it will work out that way, as whether it shows up on your credit report and how it would effect you. actually the bk is 10 years while a foreclosure is 7.

[tobee43]

additionally, enuffznuff, you appear right on top of things and are doing everything possible as we did...and still there are no exact answers as many of this situations must unfold as time goes on...many of these situation are the very first of their kind....that's why many times you will see the same question over and over...there simply is no answer as yet.

[tcreegan]

Hi again enuffznuff,

You seem like you have it all under control!!

You are out of the house and the foreclosure is a done deal, so nothing to time the BK around here. You would want to file before the 2nd goes to court and gets a judgement, but even that is fairly easy to deal with, just a pain and some filing fees.

Time the BK around income issues, exemption issues, or tax refund issues....

Tom in Colo