Will the bank foreclose after surrendering a home in bankruptcy?
Foreclosure and Surrender in Bankruptcy
Yes, the bank will still foreclose on your house even after you surrender it in bankruptcy. Surrendering a home in bankruptcy eliminates the obligation to continue on with the mortgage and protects against a deficiency lawsuit. You can toss the keys back to the bank and walk away, no more mortgage, no liability for past due payments. However, before you start celebrating, be aware that no more mortgage doesn’t mean no more house.
The problem is that you still technically own the home even after it’s been surrendered.
This is where the foreclosure comes in.
Foreclosure Ends Ownership
In order for the bank to take ownership of the house and sell it, they’ll need to foreclose to clear title out of your name and put it into their name. After all, the bank can’t sell your property to recoup some of its losses until they rightfully own the home.
How Long Until the Bank Forecloses After Surrender?
How long until the bank forecloses after a surrender? It could be months or even a year. Anyone who has picked up a newspaper recently knows that foreclosures have hit an all time high. Banks simply can’t foreclose fast enough which has resulted in a significant foreclosure back log.
What About the HOA?
Despite surrendering your home, it will likely take awhile for title to clear out of your name. You’ll still be the legal owner for awhile. This creates a whole new set of issues, not least of which is the Homeowners’s Association. Unfortunately, while the bank is taking its sweet time foreclosing on your surrendered property, you’ll still be liable for HOA dues. Remember, it takes foreclosure for your legal title to be severed and since HOA dues accrue based on ownership, the invoices will keep coming regardless of the surrender and the bankruptcy. In fact, it’s not uncommon for a consumer to emerge from bankruptcy only to be met with a lawsuit from the HOA for post petition dues on a property that was given back to the bank.
This is my situation exactly. I have filed bankruptcy, surrendered my condo that I stopped making payments on a year ago, I’m still listed as the owner and still receive bills for the HOA, gas, electric & water. The HOA just served my a summons to appear in court for dues, late fees, court & attorney costs incurred after I filed bankruptcy. What do I do now? I don’t have the money to pay the debt. Will calling the bank that holds the mortgage to inquire about the foreclosure proceedings do any good?
How can I get the surrender property back?
I know someone that surrendered their house in a bankruptcy over a year ago and have been waiting and still living in the house for the bank to forclose. They now have started the process to forclose and this person received a letter back a couple of month ago and then another notice the other day saying it has been sold at auction. Today, she received a 5 day notice to get out. We kind of thought she would have a little more time. Can they move that quick without any other kind of notice?
i want the foreclosure to be speedly so my name can be remove off the deed . i am discharge with a chapter 7 bankruputure . this year 2012 . how long will it take for the bank to tell me to move . the upkeep on the house is costly . i am still in the house because i don’t want to move out and someone vandanzied the home .
Our home was included in our bankruptcy in 2009 even though we never missed a payment and have considerable equity. We have not received any foreclosure notices, or for that matter, have not received anything form the bank except our monthly payment notice. (the bank is not asking for payment, they are just “letting us know” that a payment would have been due had we not filed bankruptcy”). What a joke. We are still making payments and have not missed or been late for payment on this mortgage, before, during or since the bankruptcy.
My questions are: Can we sell the home, or must the bank sell the home? Is the current equity ours or the bank’s? if we can sell the home will the bank take the current equity out of the profits of the sale, or will we get the entire equity and any profits?
Based on what you’ve said here, home is yours, equity is yours. You can sell the home as long as the sale price satisfies bank’s lien, doesn’t sound like an issue because you have equity. Let’s say your mortgage is $400,000 and your home is worth $800,000. You have $400,00 in equity. When you sell, first $400,000 goes to the bank and you get everything above that. If you sold for $800,000, you’d be entitled to $400,000.
A company purchased the deed to my house that I surrendered at Chapt. 7 bankruptcy from the bankruptcy trustee. This was 7 months ago. The new deed holders forced me out of the house and are now renting it. The bank just notified me of foreclosure proceedings, but now I’ve just been made aware that I may be able to save the house with a loan remodification through a federal program. My question is: even after chapt. 7 and the deed being sold, could I still be able to get the house back and move back in? Also, the bank insists that I carry insurance on this house even though I have no rights to even park my car in the driveway. They never return my calls or answer my questions….Wells Fargo. I need to know my rights and see if I cannot in some way get back what I worked so very hard for – I lived there for 19 years.
We filed chapter 7 bankruptcy 3 1/2 years ago. We still live in the house and have made no payments. Is there a time limit for the bank to forclose?
We are about 600 a month over the limit for chapt 7 ….due to a recent injury my husband had to retire, we are ready to move closer to my job 90 miles away, can you still qualify for chapt 7 if you are over in the means test?
Yes, you need to meet with a bankruptcy lawyer to crunch the numbers. In the meantime, check this article out: http://nbf.wpengine.com/bankruptcy-myths/does-failure-to-pass-the-means-test-automatically-cut-off-chapter-7-eligibility/
That’s incredible! I’m not sure what state you’re in, but the First Circuit has ruled that lenders are under no compulsion to foreclose. Keep in mind that they keep their lien in place…See this post: http://nbf.wpengine.com/chapter-7-bankruptcy/first-circuit-lender-not-obligated-to-foreclose-on-home-surrendered-in-bankruptcy/
Lisa, great questions. Please visit our attorney directory and find a local firm: http://nbf.wpengine.com/attorneys/. Our members are always happy to receive inquiries and many offer free consultations.
Hi, my question is about credit. We surrendered Our home in BK two years ago. The bank is in the foreclosure process. We thought that after two years after our BK we could obtain a VA homeloan. But, now we are finding out from some sources, that because the bank has still not finished the foreclosure process we have to start the clock from the time the foreclosure is finished. On the other side of the coin, I have heard that since we surrendered our home and vacated it immediately, that the foreclosure is tied to the BK and the two years started after the BK discharge. Our home has just recieved a sale date for April 2013, but this month is two years since our BK. Can we start looking for a VA loan now?
There is nothing hindering you from looking, but there is also nothing forcing the bank to foreclose early. The loan festering on your credit may make it more difficult to obtain the loan approval.