FACT: In most states, you need the bank to foreclose AND sell the real estate at judicial sale in order to get the deed out of your name. A new deed must be drafted and recorded.
While a common chapter 7 or 13 bankruptcy filing can cancel (aka discharge) the debt, bankruptcy DOES NOT automatically transfer real estate ownership. This issue comes up when debtors want to "walk away from the home."
One common example, if the bank believes that there are major structural defects, no furnace, no plumbing, vandalism, etc. they could forgive the debt but leave you as the owners of the house even with a bankruptcy. That could leave debtors liable for post-bankruptcy future assessments including real estate taxes, building code fines, etc.
Don't make this mistake. Call us for advice on this issue.
Tuesday, November 27, 2012
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