Question: Hi, If I surrender a property to the bank at the time of my bankruptcy, will it also show up on my credit report as a foreclosure? If so how long does it stay on the credit report? I know that the bankruptcy will stay 6-7 years, but will there be a foreclosure there? Is surrendering the property at the time of bankruptcy the same as a foreclosure?
Answer: The answer depends on how the bank reports the foreclosure to the credit bureau. In most cases the word “foreclosure” does not appear on your credit report. What will appear is the amount of the debt that was included in your bankruptcy, which generally is the amount of the mortgage company’s shortfall after your house is sold.
Technically surrendering the house at the time of the bankruptcy has the same effect as a foreclosure, except that you are doing it voluntarily. Your trustee can provide you with more information on the impact of surrendering your house prior to bankruptcy.