Many people over the last several years have been forced to file bankruptcy because they faced foreclosure. In many of these bankruptcies, the homeowner chose to surrender their home because it did not make financial sense to try and keep it. Years later they find out that the home is still deeded in their names and are understandably shocked as they further learn they have also remained financially responsible for the property taxes, homeowner associations dues, etc. associated with that home. This is because even though you elected to surrender your home through bankruptcy and receiving the discharge relieved you from the liability of the mortgage debt, the bankruptcy did not automatically take the property out of your name and put the deed to the home in the name of your mortgage holder. So what can you do? The answer to this question is not going to be what you want to hear.
There are 2 ways in which the deed of your surrendered home can be transferred out of your name. The first is for your mortgage holder to agree to a deed-in-lieu of foreclosure. A deed-in-lieu of foreclosure is where the bank agrees to take back possession of the home and you simply sign the deed over to your mortgage holder and provide them with the keys. In order to get a deed-in-lieu of foreclosure, you must reach out to your mortgage holder and ask them if they will agree to a deed-in-lieu. If your mortgage holder refuses to accept a deed-in-lieu, your only other option is to wait for your mortgage holder to foreclose on the home. When your mortgage holder begins the foreclosure process, it is important to make sure they are only foreclosing “in rem.” This means they are only asking the court for possession of the home and not suing you personally for the debt, since the debt was discharged through your bankruptcy.
Unfortunately, it may take your mortgage holder years to begin foreclosing on the home. It is important to know that as long as the property remains deeded in your name, you will remain responsible for the property taxes, homeowner association dues, the upkeep of the property, etc. If it does take your mortgage holder years to foreclose, it could also mean you will have to wait even longer after you received your discharge in order to purchase a new home. This is because the foreclosure judgment will most likely be reported on your credit report.