What Is A Deed In Lieu of Foreclosure?

For homeowners that have fallen behind or “defaulted” on their mortgage loan and have decided they do not want to keep the home, a deed in lieu of foreclosure may be an option for them.  In the simplest of terms, the deed in lieu allows the homeowners to voluntarily transfer the property from the homeowners name to the mortgage company’s name without going through the prolonged and for the mortgage company costly foreclosure process.  This process also satisfies the debt the homeowner owes to the mortgage company on the loan.  Although the loan is satisfied through this process, the homeowners’ credit will still reflect that the loan was in default but satisfied by a deed in lieu.  In other words, there will be a negative impact on the homeowners’ credit from executing the deed in lieu of foreclosure, but it may not be as detrimental as a foreclosure.

House Going Through Foreclosure

There are several things the mortgage company will consider before deciding whether they will agree to a deed in lieu of foreclosure on the property.  These include:

Are there any other mortgage loans (second, third, or Home Equity

Line of Credit (HELOC)) on the property?

Are there any homeowners’ association liens on the property?

Are there any judgment liens on the property?

Are there any other blemishes on the title?

If there are any of these issues, the mortgage company will most likely not agree to the deed in lieu of foreclosure and will proceed with the standard foreclosure process.  The mortgage company cannot eliminate the other liens on the property through the deed in lieu process.  As a result, if you have more than one mortgage loan or other liens on your property, you may want to consider other options including a short-sale of the property or filing bankruptcy.  Each of these options has their own risks and benefits and is discussed in other blogs.  Most deed in lieu of foreclosure paperwork is drafted by the mortgage company’s attorney, so it is recommended that the homeowners seek the advice of an attorney, usually someone practicing real estate law, before signing the deed in lieu documents.

How Do I Write An Answer To A Complaint?


After a complaint is filed against you, you have 30 days to file an answer to that complaint. There are many generic forms that can be found that will help you to do this. If you use the internet to help you, make sure it is a reputable website that you are getting the information from.  As a reminder, if you are planning on filing bankruptcy, your bankruptcy attorney does not represent you in this lawsuit so they cannot help you write your answer unless the agree to do so in a separate contract.

The top part of your answer should look a lot like the top part of the complaint. It should have the state and county that the complaint was filed in, which court, District or Superior, and the case number. Make sure that all of this is exactly how it appears on the complaint. The other thing that needs to be included there is the case number that is listed on the complaint. This is very important that you put the correct case number, because this is what will link the complaint and answer together.

Pen and Paperwork

The body of the answer will have numbered bullets just like the body of the complaint. You will either admit, deny or explain you neither admit nor deny because more information is needed. You will do this by lining your answers up numerically the same way they appear in the complaint.

Make sure that you sign and date the answer with the date that you are intending to get it filed with the Clerk of Court.  You will also need to prepare what is called a Certificate of Service. This basically states you certify you filed your answer with the court and have also mailed a copy to the Plaintiff or Plaintiff’s attorney.  This also must be filed with the court when the answer is filed. You will take both of these documents to the clerk of court in whatever county the complaint was filed and tell them you need to file an answer to a complaint. They will get it filed and give you a copy that has their stamp on it.  You will need to mail a copy of this to the plaintiff’s attorney that is listed on the complaint. Doing all of this will buy you about 30 days to figure out what you want to do to remedy this situation.

What Is A Complaint? | Parts of A Civil Lawsuit

When the sheriff shows up at your door and hands you a stack of papers with a bright yellow sheet on top, what are they actually giving you? Most likely they are giving you what is called a complaint. A complaint is the first step in initiating a lawsuit. This means that someone has filed papers with the court to begin the legal process to write some sort of wrong. Most of the complaints clients who come into our office see are ones saying they owe someone money.

Bills in Mailbox

So what does a complaint typically say? It will state which county the complaint has been filed in and whether it is in the District or Superior court for that county. The title of the complaint will also say who is filing the complaint, the plaintiff, and who they are filing it against, the defendant. The case number will also be stated in this section.  Below that it will also state why they are filing the complaint. For example, say John Smith owes ABC Bank $10,000 that is past due on a credit card. The body of the compliant will list this, along with the specifics of when the card was applied for and the actual card number.

There will also be several statements that are numbered and they will list the terms of the complaint. These typically state who the plaintiff is, where the defendant lives, that the defendant opened an account and agreed to the term and conditions of the account and that they then have failed to pay on that account. The last paragraph will state what the plaintiff wants as a remedy or result of filing the complaint. What the plaintiff will typically say they want is a judgment for the full amount the plaintiff owes plus a certain amount of interest and attorney’s fees.

It is important that you respond to the complaint by filing an answer. If you do not respond to the complaint then you will automatically be found liable for the lawsuit. The courts will view it as you failed to respond and, therefore, you admit that you owe the money and are liable to the plaintiff. The court will then issue a default judgment saying you are fully liable for the amount owed. Be sure to read our other blog post on how to respond to a complaint with an answer. Also know that if you do have a lawsuit against you bankruptcy may be an option worth exploring more.

Why Won't They Draft Payments From My Bank Account After Filing Bankruptcy?

Writing a Check to Make PaymentsIf before filing for bankruptcy you had automatic drafts from your bank accounts to pay other bills then this may stop when you file the bankruptcy. It’s obviously important to know that these automatic drafts may stop because we want to make sure you do not get behind on things like house payments, car payments and other important bills you have.

Creditors may stop the automatic draft(s) because they want to make sure they don’t violate the automatic stay enacted by filing the bankruptcy. They don’t want to accidentally charge you money that has been wiped out in the bankruptcy. However, even if you don’t include a debt in your bankruptcy they may still stop the automatic draft(s) for precautionary measures.

If you file bankruptcy then you can contact the creditor and get them to begin to send you paper statements if necessary. We talk more about how to get statements again after filing bankruptcy in another blog post.

However, you may not be able to get automatic drafts set up right away after filing the bankruptcy. Be aware of this and be sure to plan accordingly.

Why You Might Need To Do A Quitclaim Deed Or Deed in Lieu of Foreclosure Even After Filing Bankruptcy

Whether or not someone who files bankruptcy also needs to do a quitclaim deed or deed in lieu of foreclosure is a question that many bankruptcy attorneys and clients are asking themselves these days. A few years ago, most banks and mortgage companies (we will call them banks for this blog) foreclosed on a property – house or land – within three to four months of the bankruptcy filing. At the foreclosure sale, the bank would pay the property taxes on the house as well as any homeowner association liens on the property. For many people, that is now considered the “good ole’ days”.

Why Have I Stopped Getting Statements or Bills After Filing Bankruptcy?

Doing Bankruptcy Research on a ComputerWhen you have filed your bankruptcy petition and receive a case number, an automatic stay is enacted to protect you under the bankruptcy code from creditor contact, lawsuits, repossessions, foreclosures, etc.  In turn, this limits the contact a creditor may have with you.

If a creditor violates the automatic stay then they can be sanctioned by the federal court system. In order to avoid this, many creditors choose to stop sending anything that can be viewed as a collection attempt.

After your bankruptcy is filed and the creditors are notified, they are no longer allowed to send you bills trying to collect on a debt. Typically, the automatic stay is a good thing because it means the harassing phone calls and collection attempts will stop. However, many creditors will stop all forms of communication, even if you have agreed to keep paying on the debt, due to fear of violating the automatic stay. Therefore, it is important that you remember to continue to make your payments (on debts not being wiped out in the bankruptcy and regular utilities) even if you do not receive a statement each month.

If you want to continue to receive statements then there are a couple of things that you can do to try to help restart this process.

First, you can contact the creditor and explain that you filed bankruptcy and, despite that, you would like to still receive monthly statements from that creditor. Some creditors will agree to then send you monthly statements.

Second, if the first option doesn’t work then you can get the assistance of your bankruptcy lawyer. Once your bankruptcy is filed, request a letter from your bankruptcy lawyer that will give a creditor permission to send you statements or allow for other payment arrangements.  You will need to do this usually for a mortgage company where a car finance company will be sending a reaffirmation agreement, so making payments and receiving statements should not be difficult.  Other secured creditors, such as furniture companies, jewelry stores, or electronic stores, may require a letter from your lawyer as well.

The bottom line is, you may stop receiving statements or bills after filing the bankruptcy because the creditors don’t want to violate the automatic stay. Despite this, it is critical that you still make your payments on things like house, cars and monthly utility payments.