Once you’ve filed for Chapter 7 bankruptcy and received your discharge of debts, your mortgage lender’s attorneys could still contact you even if you included your home in your bankruptcy. Such letters will often urge you to contact the lender for options: loan modification, short sale, deed-in-lieu of foreclosure, forbearance, repayment, etc. If you find talk of foreclosure and walking away from a property that still has your name on the deed…you aren’t alone.
When being contacted by lenders post-bankruptcy, a moderate level of paranoia regarding the situation could be to your benefit until the property is no longer in your name. Up to that point, it’s only natural to wish for the closure that this particular day would bring.
Foreclosures in today’s market are different than in years past. Sometimes the foreclosure process can take a very long time for a number of reasons:
- You could own a home in a region that is experiencing a high foreclosure rate. It’s to the benefit of the lender not to have too many foreclosed homes in one area because they will be able to keep the prices a little higher.
- Lenders are often holding onto a large inventory of foreclosed properties. The process is long and detailed. There are only so many employees able to handle the many steps of the process and there are only so many hours in a day for them to use to get the job done.
- Many would agree with me in my belief that some properties simply get accidentally overlooked. The paperwork gets lost in the shuffle. Lenders were not prepared for the foreclosure crisis. It puts them in a bad position. In some situations, the original lender does not even exist anymore. This makes it even easier for the paperwork to get lost. If that happens, it could be months or years before the lender even realizes the property exists and needs to be foreclosed.
If you are in receipt of post-bankruptcy contact from your mortgage lender and it’s making you nervous, remember:
You are not responsible for unpaid property taxes or property insurance. This will become the responsibility of either the lender or the new owner.
You can keep track of the foreclosure process directly with the lender.
Your name will appear in the lender’s computer system until the property is sold (you can contact the lender every 30-60 days to check on the status).
When you confirm the sale of the property, you can verify this through the county recorder’s office. They will eventually receive a new deed without your name on it.
If you are worried about the fact that your name is still on the deed of your house post-bankruptcy, be patient AND persistent. You can’t force the process to go faster, but you can be prudent in monitoring the situation and making sure that your name is eventually removed.