What’s best to do regarding a Deed in Lieu of Foreclosure and a Chapter 7?
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What’s best to do regarding a Deed in Lieu of Foreclosure and a Chapter 7?
I filed a Chapter 7 in Virginia in June. The mortgage lender and I have agreed to a Deed in Lieu of Foreclosure and the Chapter 7 Trustee has approved it. The mortgage lender had their attorney prepare the DIL who is also the mortgage Trustee. Is it OK for the mortgage Trustee to prepare this? And is it ethical?
Asked on September 4, 2012 under Bankruptcy Law, Virginia
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
So long as the bankruptcy trustee has approved the deed in lieu of foreclosure as to your home to your lender with respect to your Chapter 7 bankruptcy filing, there is nothing improper for you to sign such a document and transfer title to your home to the lender provided there is a bankruptcy court order approving it as well.
Custom and practice in the real estate industry allows the lender the prepare such a deed in lieu of foreclosure. Such happens all the time and is ethical. I suggest that you consult with your presumed bankruptcy attorney about this deed if you truly do not understand that by signing it you are giving up your rights to the property you presently own.
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