Expert: Terry Leeders - 8/30/2007

Question
We were discharged chapter 7 under the new laws and did not reaffirm our mortgage.  We have been making on time payments, but now cannot afford this home.  We realize we technically owe "nothing" and can walk away if we want.  Home will probably not sell for what is owed, although our area is not currently undergoing the market correction most of the country is experiencing.  

Would offering the bank a Deed in Lieu be worthwhile?  Would the bank even consider this under our circumstances?  Should we just notify them we are moving and walk away?  We live in a very small (although booming) small town and would like to call the least attention to this as possible.  Would a Deed in Lieu be less conspicuous than a foreclosure?  If the bank had a deed in lieu, would they just go ahead and list the home and put it on the market?

Any advice would be appreciated.

Answer
A deed in Lieu is just a tool to save the lender the time and effort in foreclosing.  IF you have only one lien on the home, they may consider it. Go ahead and ask if you feel that you cannot sell it, or cannot afford to keep it.
Since no reaffirmation, you aren't on the hook for the loan.