Even if you’ve filed bankruptcy and moved out of your home, your name remains on the property title. Moreover, mortgage liens are generally not discharged in a chapter 13 bankruptcy. Unfortunately, you will remain the owner of record until your lender forecloses or you take the necessary steps to remove yourself from the title. A deed in lieu or a short sale is your best bet at eliminating your name from the title and avoiding significant damage to your credit in a bank foreclosure.

A deed in lieu allows you to convey all interest in the property back to your lender, satisfying the loan and allowing you to circumvent the catastrophic effects foreclosure proceedings can have on your credit report. In a short sale, the proceeds from the sale fall short of the balance owed. Like a deed in lieu, a short sale can help you avoid foreclosure and release you from the property lien. Neither option involves an additional expense and will give you an opportunity to regain some control over what happens next.

Though filing for bankruptcy will delay the foreclosure process, the bankruptcy proceedings do not pay off the mortgage nor does it offer protection from foreclosure. But while things may seem grim, the good news is your home hasn’t foreclosed yet. This gives you an opportunity to proactively seek approval from the trustee, pursue a short sale or deed in lieu and rid yourself of the property for good. Lenders are often willing to work with underwater borrowers looking for alternatives; consult with an experienced foreclosure attorney and explore your options.

Stephen K. Hachey, a Florida real estate attorney can help your wade through this difficult process and determine a positive solution. Contact him at 813-549-0096. The opinions in this post are solely those of the author. The author takes full responsibility for the content. Like all blog posts, this is offered for general information purposes and does not constitute legal advice.

This post was written by Stephen Hachey. Follow Stephen on Google, Facebook, Twitter & Linkedin.