How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Elizabeth Prentice Your Own Question
Elizabeth Prentice
Elizabeth Prentice, Attorney
Category: Bankruptcy Law
Satisfied Customers: 174
Experience:  Managing Attorney for one of the largest consumer bankruptcy firms in America.
Type Your Bankruptcy Law Question Here...
Elizabeth Prentice is online now
A new question is answered every 9 seconds

Hello. We live in Illinois. We filed bankruptcy 4 years ago

This answer was rated:

Hello. We live in Illinois. We filed bankruptcy 4 years ago and has been discharged over 3 years ago. We did not re-affirm our home, but we are still living in it and making payments. We are wanting to downsize to a condo. Our present home is upside down. Can we buy a condo if we are still living in our home? I would just give the keys back to the bank and leave the home in its great present condition. I was told that eventhough the home was included in the bankruptcy, not reaffirmed and no longer appears on our credit reports we can not buy until 2 years after the bank sells our home....... Is that true? If so, we have to rent somewhere after we leave the home...... Wait for the bank sale of the home..... Then buy 2 years later? Would love to hear your insight...... Thanks
I am a bankruptcy attorney and I would be happy to assist you. In order to answer your question, I will clarify a few things for you.
First, if you choose to walk away from your home right now, your bankruptcy discharge protects you in that the mortgage company can not later sue you or attempt to recover from you the deficiency. This is the protection your discharge provides.
The options you are discussing are called a "short sale" or "cash for keys." In both options, there are certain contractual obligations and rules which the bank has the right to make, such as not being able to obtain a mortgage through them again for 2 or more years. The reality is that if you actually have money, anyone in America has the right to buy property. If you wanted a $500,000 home after short selling your house and you had cash, then you don't have to wait 2 years. However, obtaining a mortgage is a different story. Most of the larger banks have similar rules and regulations. Some require you wait 3 years to obtain a mortgage and others require only 2 years at their specific mortgage companies. So, to answer your question, if you choose to do a "short sale" or "cash for keys" or "give back the keys" to the bank regarding your home, you will need to apply at multiple mortgage companies to determine if one is wiling to lend to you. Each bank/mortgage lending company will have different rules. However, typically most banks you will go to will say you need two things in order to borrow money from them (mortgage): 1) high credit rating and 2) Two years have passed since the bank took back the house. If you find yourself in that situation, a good option would be to find a home that has an owner willing to do a lease-purchase option contract. This way you could rent the home for 2 years, and then when you are ready you could buy it from the owner. This is a preferred option for many who are either in bankruptcy or have received a discharge, since it provides time to rebuild your credit.

I hope my answer has assisted you and that you will provide me a positive rating!
Elizabeth Prentice and other Bankruptcy Law Specialists are ready to help you
Customer: replied 3 years ago.
Thank you Elizabeth. One more question, you mentioned having to wait 2 to 3 years in order to obtain a new mortgage is what most banks require from the time of the "giving back the home". Do you mean from the time I actually sign papers giving it back or from the date that the bank sells the home? When does the clock start clicking?

That is an excellent question. Typically, the clock starts ticking as soon as your name gets off the deed. This is because the other banks (and yourself) can go to the county recorder where the home is located and find out when the new deed transferring it back to the bank was recorded. i am glad my answer has assisted you! Please remember you may request me by name for future questions.