If your filing a deed in lieu or short sale can they touch your bank accts. I'm not on loan just have joint acct. ?"

Question

If your filing a deed in lieu or short sale can they touch your bank accts. I'm not on loan just have joint acct. ?"

Answer

This isn't really a bankruptcy question, but I'll give you the information I have.

You need to get the lender's ok to file a deed in lieu of foreclosure. My understanding is that this option has been greatly limited quite recently.

Consult a tax professional about tax consequences of a short sale. The IRS website says there is no tax consequence for lender-approved short sales if the debt was forgiven in calendar years 2007 through 2012. So if you're going to do this, it would be best to get it done sooner rather than later. I don't know how the timing of this is calculated, but I do know that anything having to do with real estate is notorious for running behind schedule. Be aware of this for transactions that seem to be creeping towards the end of the year.

Generally, a creditor must have a judgment against a person before any bank accounts can be seized. Problems arise when an institution (usually a credit union) has a dual role of both bank and mortgage holder. It would be prudent to move your accounts.

Married couples hold property such as bank accounts in a tenancy by the entirety, so no worries if only one is obligated on the loan, even if there is a judgment against him/her.

If you are not in a marital relationship w/the obligee, but there is no judgment and the financial institution is not the lender, still probably okay.

In bankruptcy, you can write off a deficiency, such as might be owed to a lender if the house was sold for less than what is owed. But after the expiration of the Mortgage Forgiveness Debt Relief Act, there will be tax consequences, which will not be dischargeable in bankruptcy.