At what point does a foreclosure affect the first-time home buyer’s credit – when I stop paying or when the bank serves papers?

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At what point does a foreclosure affect the first-time home buyer’s credit – when I stop paying or when the bank serves papers?

I bought my house 3 yers ago with the first-time home buyer’s credit. Next month our 36 months will be up. We are about to file for Chapter 7 bankruptcy. Should I pay on the house for the next 2 months? I am concerned that even though the foreclosure could take a couple months the lack of payment could show that it was no longer our primary residence beginning this month.

Asked on July 5, 2012 under Real Estate Law, Missouri

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

It is a little difficult to follow you here as there appears to be more going on than I can grasp in what you have written.  But once you stop paying your mortgage it affects your credit.  Now, are you talking about repayment of the creidt under the IRS rules?  I would consult with a tax attorney or accountant as well as your bankrultcy attorney here as soon as you can.  Good luck.


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