Deed In Lieu

[Garwyli]

We filed bankruptcy 3 years ago and have been struggling with the mortgage company to take over the property.  We moved out a few months after filing bankruptcy and accomplished a deed in lieu of around the same time, but for 3 years they continue to call us wanting us to pay money, etc.  We have finally been in contact with a person on their end whom is trying to help us resolve the confusion.  Bottomline they are claiming to have never received our bankruptcy papers and are now trying to figure out everything.  They are claiming to have no record of the deed in lieu of, and are requesting a new deed in lieu of.  My concern is that the new dates on the deed in lieu of will be todays date and this will reset the clock again for us to get another mortgage loan.   is...can they back date the recordation date of the property to the bankruptcy date or do they have to use the new deed in lieu of date?

ANSWER: You didn't say what sort of bankruptcy you filed, although I assume it was Chapter 7.

Although the loan company says that it never received notice, you need to look at the mailing list in connection with the bankruptcy and see whether it was properly addressed.  If so, then the loan company is bound by your discharge of the debt owed to it.  It really doesn't matter whent he property went to the loan company but that the debt was discharged and they cannot pursue you.

Assuming that the notice was incorrectly addressed, the discharge is still good if the case was a "no asset" case.  The notice is only to permit the creditor the right to file a timely claim in the bankruptcy and to object to the discharge.  It is doubtful that the loan company had grounds to object to the discharge, and as a secured creditor it would probably have had no unsecured claim on assets in any event.  But if it was a "no asset" case, their doom is sealed and the discharge is good even without notice(at least according to most court decisions).

You should check this all out with your attorney, assuming you had one in the bankruptcy.  You had no obligation to provide a deed in lieu in the first place.  I question whether the time for getting another mortgage in the future runs from the date of recording of a deed in lieu(or a foreclosure) or from the date of the bankruptcy.  You should ask someone about that.

If you provide another deed in lieu, I would carefully write on it that "this is a replacement for the deed in lieu provide to [name of lender] on [date].  The effective date of this deed in lieu is [same date as previous document].  Acceptance of this deed in lieu by [name of lender] constitutes its agreement that the date of this replacement deed is [same date as previous document]."  That will at least memorialize the situation.

---------- FOLLOW-UP ----------

Thank you for your thorough answer...I would like to provide a few more details, so that I can be sure I understand what you said.  First we filed a Chapter 7 and I attached a copy of the file.  Today we received from them a Validation of Debt Notice and it is over $200,000 more than what the loan was at 3 years ago.  I just don't understand any of this stuff.  Our bankruptcy lawyer has retired and the person who runs the office now told us not to worry about anything that we aren't accountable for anything.  The thing that I am trying to get is the deed transferred out of our name.  Per our new lender we must wait 3 years from the date they take the property out of our name.  They feel it should have been done at discharge and that is what we are fighting with Chase over since we have accomplished the deed in lieu of 3 times.  We have seen a lawyer here and they would like for us to file a law suit against them.  My concern is that this would be costly and lengthy.  We just want to move on and settle down with our family.  The reason we filed bankruptcy was we got into a loan that the first month began at 9.85% on a $650,000 note and we are in the military...we don't make that much money.  Any guidance would be appreciated.  The paperwork says Chapter 7, section 727, of title 11.  Please let me know if that helps.

[Hamo]

Your real problem is your new lender.  Perhaps you should try someone else.  The debt was discharged a long time ago, and the fact that Chase cannot seem to understand that it owns the property is a mystery.  Get a loan broker who is sympathetic and understands what is going on and see if he or she can explain why the property transfer date is so important.  If that continues to be the case, maybe you can get an attorney to draft a deed in lieu(like the one I suggested above) which specifies that the "new" deed in lieu is just a replacement.  You might ask your own lawyer whether you can just sign the "new" deed in lieu and just record it yourself and then send it off to Chase.  That should fix them.  But, as I said, your problem is the rules relating to how long you have to wait to get a new loan.  Focus on that and see whether you can provide documents which get yourselves around that problem.  And good luck!