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If it is not listed on public records or my credit report do I have to acknowledge it?
Anonymous3 views3 answers
We had a mortgage that was included in a chapt. 7 bankruptcy, not re-affirmed, then finalized as a deed in lieu in the summer of 2010. We have the income to buy a house again,but the Deed in Lieu is not listed on our credit reports as public record or in Negative Accounts, it just says Included in Chp. 7 bankruptcy. Lenders want to know what happened to the house. What should I tell them? The Bank Failed to report it to the credit Bureaus?
The bank is not required to report that you eventually disposed of the property via a deed-in-lieu - you included the debt in a bankruptcy, and the debt was not reaffirmed. Therefore, it was discharged. What they're reporting is correct. Frankly, I have no idea why you did a deed-in-lieu since there was no reason to do so - the debt was discharged. All you accomplished was making it easier on the bank by not having to make them go through foreclosure hoops.
If you want you can tell them that you gave it back to the bank in lieu of foreclosure. But, there is no difference in my opinion as to a deed in lieu and walking away from a house in bankruptcy.
I know that there is a widespread misconception to the contrary, probably fed by realtors trying to survive in this horrid economy. But that does not change the reality.
A property that is included in a chapter 7 bankruptcy petition is essentially surrenderd in the chapter 7 bankruptcy case. There is no need to re-affirm a surrendered property and I do not believe it is necessary to execute a deed in lieu if the property is included in the chapter 7 case.
I believe that the best answer to your question is to inform that bank that the property was included in the chapter 7 case.
