Ask The Get Out of Debt Experts

Deed in Lieu of Foreclosure. What is it? – Bob

“Dear Steve,

We’ve been having a tough time making our mortgage payments and someone mentioned that we could do something called a deed in lieu of foreclosure and hand the keys back to the bank. Is that true?


Dear Bob,

A deed in lieu of foreclosure is essentially giving your keys back to your house and walking away. But, unless you coordinate this process with the bank they could refuse to accept your signed deed in lieu of foreclosure and the keys. This is not something you get to do unilaterally.

A deed in lieu of foreclosure offers you some advantages if the bank will accept it. It will avoid a public foreclosure of your home but it will still result in a negative mark on your credit report. Giving your home back in a deed in lieu of foreclosure can be less expensive to you since there will no foreclosure charges to you for having to go through the whole process of foreclosing on your home and cleaning it out.

Giving your home back using a deed in lieu of foreclosure can still leave you in the same difficult position as a foreclosure itself since you will be asked on future credit applications if you have ever been foreclosed on or participated in a deed in lieu of foreclosure.

And just because you gave the home back with a deed in lieu of foreclosure it does nothing to address your other financial problems that are probably going on at the same time. If you are going to have to file bankruptcy to address those other issues then trying to negotiate a deed in lieu of foreclosure is probably not necessary. Just give the house back to the bank and include any bank charge against you in your bankruptcy.

If you have more questions about how to handle getting rid of your home then I suggest that you click here for a free bankruptcy consultation and meet with a local bankruptcy attorney, first, before you do anything.

Bottom line, a deed in lieu of foreclosure is a tool to use in a specific situation and not a general strategy to just hand your home back to the bank.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

See also  We Are About to Lose Our Home and My Husband Won't Talk to Me About It. - Jeanette

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

Leave a Comment

Scroll to Top