What options do I have to get rid of the home I have since I am moving and can no longer afford?
Full Question:
Answer:
A property owner generally is liable for any property taxes due and the property is subject to a tax lien if not paid on time. Nevada allows the lender to get a deficiency judgment against the debtor is the property sells for less than the amount owed by the debtor. The following is a Nevada statute:
NRS 40.455 Deficiency judgment: Award to judgment creditor or beneficiary of deed of trust.
1. Upon application of the judgment creditor or the beneficiary of the deed of trust within 6 months after the date of the foreclosure sale or the trustee’s sale held pursuant to NRS 107.080, respectively, and after the required hearing, the court shall award a deficiency judgment to the judgment creditor or the beneficiary of the deed of trust if it appears from the sheriff’s return or the recital of consideration in the trustee’s deed that there is a deficiency of the proceeds of the sale and a balance remaining due to the judgment creditor or the beneficiary of the deed of trust, respectively.
2. If the indebtedness is secured by more than one parcel of real property, more than one interest in the real property or more than one mortgage or deed of trust, the 6-month period begins to run after the date of the foreclosure sale or trustee’s sale of the last parcel or other interest in the real property securing the indebtedness, but in no event may the application be filed more than 2 years after the initial foreclosure sale or trustee’s sale.
(Added to NRS by 1969, 573; A 1979, 450; 1985, 371; 1987, 1345)
One of the most common methods of seller financing is a contract for deed, or land contract, which is often used as an alternative means of financing the purchase price of property. The buyer does not receive an actual deed until payments are made under the terms of the contract for deed agreement. Until the buyer receives a deed, ownership isn't transferred and the property is subject to being foreclosed on if the mortgagee/owner defaults on the mortgage. The responsibility for payment for the property is a separate issue from the ownership of the property.
If there is a mortgage on the property, the contract may violate a due-on-sale clause in the mortgage which the lender may or may not seek to enforce. Most lenders require that the mortgage or deed of trust contain a due on sale clause. This is an acceleration clause in a loan, calling for payment of the entire principal balance in full, triggered by the transfer or sale of a property. Such a clause permits a secured mortgage lender (federal, state or private) to call the entire unpaid loan balance due and payable immediately if the property securing the loan is sold, transferred, traded, gifted or otherwise disposed of without the lender’s prior written consent.
If the home is foreclosed on, the buyer may lose investment payments that are made and then the buyer loses the home.
Anyone considering filing bankruptcy should first evaluate all of the potential alternatives, and then make an informed decision regarding whether bankruptcy is the best choice. It should be stressed that this is a personal decision for each individual. There is no one answer that is right for everyone. Only by carefully exploring all of the alternatives may a person truly know whether bankruptcy is the best solution to their debt problems.
Prior to making a decision to file bankruptcy, each individual should first attempt to contact his or her creditors and determine whether it is possible to obtain their cooperation in working out a different payment schedule. Most people would be surprised to learn that creditors often are willing to make reasonable modifications to assist the debtor in repayment. Communication and honesty are the key words here. In exploring this option, the creditor should be honest and forthright with the creditor regarding one's financial situation.
The debtor should also take a close look at his or her assets. If any have a resale value, consider whether a sale of those assets and the application of the proceeds of the sale to one's debt may reduce the debt to a more manageable level. Often, after the sale of one or more personal assets, debt is reduced to a level which makes bankruptcy a less attractive option.
Another option to explore, which may not be available to every debtor, is a consolidation loan. It may be possible for some debtors to obtain a consolidation loan to repay one's debt, which very often will result in lower overall payments.
Another option to examine is Consumer Credit Counseling Service. CCC is a nationwide nonprofit organization that attempts to work with both the debtor and his or her creditors to devise a more manageable repayment plan. This service very often results in revised payment plans which are acceptable to both the debtor and the creditor, thereby eliminating the need to file bankruptcy.
The automatic stay is one of the most valuable functions of a bankruptcy proceeding for the debtor seeking relief from creditors. The automatic stay immediately stops any lawsuit filed against you and virtually all actions against your property by a creditor, collection agency or government entity and provides an injunction against the continuance of any action by any creditor against the debtor or the debtor's property. After filing for bankruptcy, the automatic stay will prevent creditors from calling and harassing the debtor in any way. In fact, should a creditor continue to attempt to contact the debtor during the automatic stay, that creditor could be held liable for damages.
Federal bankruptcy laws provide a private cause of action for an individual injured by any willful violation of the automatic stay. The injured individual is entitled to recover actual damages, including costs and attorney's fees. Punitive damages are awarded when the actions taken by the creditor are particularly egregious and there is a showing of actual damage.
After 10 years, the bankruptcy must be dropped from your credit report. The policy of the Associated Credit Bureaus is to remove Chapter 11 and Chapter 13 cases from credit reports after 7 years to encourage debtors to file under these chapters. It is possible to have the information removed before the 10 years is up. If credit bureaus failed to timely verify the information with the court clerk, and you initially disputed the information as erroneous, under the Fair Credit Reporting Act (FCRA), unverified information must be deleted. If you suspect your public records have not been verified by the court, ask the credit bureau to provide you an explanation of how they verified. If your records are not removed by the credit reporting agencies automatically, you can send a letter of dispute to have the records taken off your report.