NPN and Chapter 7 vs NPN Ch13

[Daria B.]

hi all-

I've purchased NPN that were in BK13 and understand the implications of the BK13.

I understand what Chapter 7 means as well, but, what I'm missing is how the workout generally goes. Is it a foregone conclusion that because of the Chapter 7 that the borrower(s) are essentially saying we are walking away from our debt so highly likely the property is then foreclosed upon. 

Can someone who has dealt with Ch7 NPN tell me what they encountered - and I suppose a DIL is always a method to utilize instead of FC.

Thank you

Daria

[Patrick Desjardins]

Originally posted by @Daria B.:

hi all-

Is it a foregone conclusion that because of the Chapter 7 that the borrower(s) are essentially saying we are walking away from our debt so highly likely the property is then foreclosed upon. 

They are no longer responsible for the debt, but the debt stays attached to the house. If they want to stay then they have to get into an agreement with you. When the house is owner occupied it's very common, you just have to make sure that they still have income. Often they are getting rid of credit card debt, medical debt, or judgments.

You have no idea how often borrowers will say stuff like "it's been discharged" thinking that the debt just magically disappeared and they got a free house. They will ignore you / your servicer until you're close to the foreclosure date, then they realize it's actually true and many will work with you.