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Foreclosure on new home crazy story


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Advice needed: long story short I bought a home in 2017...the builder sold me a lemon...and by November 2018 I HAD to move...I’m suing them however, I had to file chapter 13 bankruptcy in January 2020 to get rid of the home ...I had very little debt at the time of filing and now I want to rebuild my credit..thing is apparently they haven’t foreclosed and ppl still call me about buying the house....this has been a nightmare! I feel the foreclosure and Chapter 13 BK is unfairly on my record...Do you have any suggestions?

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You already have a lawyer.  Stay the course and have her/him negotiate the removal of the foreclosure from your credit report as part of the settlement.

 

As for the Chapter 13 filing, your credit report is a record of fact and doesn't attempt to determine "fairness."

 

With that said, there are a couple of long threads about getting BKs deleted.  For this part of the matter, I'd start there.

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Let your attorney do their thing. They have a duty to act in your best interest.

 

If the house hasn't been foreclosed yet and you win your lawsuit against the developer, it's possible you'll be able to work out a settlement or other loss mitigation (short sale, deed in lieu, etc). That will prevent a foreclosure from showing up on your credit report, though the bankruptcy and late/missed payments will still tank your score. Right now, I would just sit tight.. There's not much you can do at this stage.

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  • 3 months later...

I don't know your specific circumstances and some of this may not be applicable to you, but I would have been hesitant to  file bankruptcy until the house has been foreclosed on or until a deed in lieu of foreclosure or short sale had occurred.  Until the foreclosure, the house is still legally in your name, and you are liable for post-petition home owner's association fees and possibly property taxes depending on the jurisdiction. You might also have liability (depending on your state) if someone is hurt on the property.  Chapter 7 and chapter 13 bankruptcies only cover debts arising on or before the date of filing and not after. The good news is that if you are eligible to convert to chapter 7, any post petition debts before the date of conversion will be included in bankruptcy as well to the extent that such debt is dischargeable.

 

The bad news is that if you are unable to convert (there are conflicts among courts as to whether the means test applies to converted chapter 7 cases) and you have post petition debt for the house then you may need to pay it or dismiss your chapter 13 and refile. I'm not trying to scare you, but before I worried about credit repair, I would make sure there are no impending dumpster fires waiting for you. Usually you would think bankruptcy attorneys would screen for this sort of thing, but I have seen many instances where the bankruptcies were filed and discharged only for the debtor to learn of liability for post petition fees like homeowner's association fees when the bank delayed foreclosure. Good luck!

Edited by CreditCurious20
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On 6/23/2020 at 12:20 PM, JunkDebtBuyer69 said:

Let your attorney do their thing. They have a duty to act in your best interest.

 

If the house hasn't been foreclosed yet and you win your lawsuit against the developer, it's possible you'll be able to work out a settlement or other loss mitigation (short sale, deed in lieu, etc). That will prevent a foreclosure from showing up on your credit report, though the bankruptcy and late/missed payments will still tank your score. Right now, I would just sit tight.. There's not much you can do at this stage.

Actually the cause of action against the developer is an asset that is part of his bankruptcy estate, and the trustee will likely take control of the case if there are proceeds that can be used to pay his creditors (unless it is a 100% plan and all unsecured creditors are going to be paid). Even if he sues in his capacity as a chapter 13 debtor, the court would still likely need to approve the settlement. His bankruptcy schedules should list any inchoate interests in lawsuits. If you do not list the cause of action in your schedules, many jurisdictions will dismiss the case under the doctrine of judicial estoppel. 

I would also seek a second opinion from another lawyer. In the original post, you stated that you had little debt other than the home. I don't know the circumstances which led to your January 2020 filing, but it sounds like the bankruptcy may have been premature.

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