What is Deed in Lieu?
Definition: The homeowner turns the deed over to the mortgage company to prevent foreclosure. The bank may agree to a Deed in Lieu of Foreclosure to not pursue you for the deficiency but it may still cause a tax problem. In some cases, you may be able to save yourself and the mortgage company the expense and trouble of foreclosure and bankruptcy but at a cost to you of immediately giving up the home. You may still be taxed as income for the amount that was forgiven as in this Deed in Lieu case.
Many people choose to litigate or stay in the house rent free until the house is sold. This allows people to save up house payments they would have made to pay an amount down on a new home or lease with an option to buy. Under Kentucky laws and regulations most people will qualify for a prime rate government mortgage 2 years after filing bankruptcy (if no foreclosure is involved), or 3 years after bankruptcy and a foreclosure. We can file an answer to your foreclosure to give you additional time to do a work out with your mortgage company or file a bankruptcy to help avoid or stop the foreclosure. Here is a general timeline of the foreclosure process.
The foreclosure process normally takes less than 6 months if no answer is filed and from 6 months to 2 years if an answer is filed. Even if you file bankruptcy under Kentucky law, a foreclosure may be required to transfer the ownership to the bank or new buyer in order to get a clear title. If you are stuck in a foreclosure see us for foreclosure help. Please beware of Rescue Scams claiming to help you stop a Kentucky foreclosure.