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Permalink Reply by Smitty on February 20, 2013 at 4:27pm

If it's 7 be prepared to wait for approx 90 days before a discharge is issued, and only after the discharge will a lender issue approval.  If it's chapter 13 you will need permission from the bk court in order to give to the lender for short sale approval.  Chapter 13 is approx 3 years. 

She will likely not be liable for the debt remaining on the house, but you will still need the liens (mortgages) discharged.  You still COULD be liable for remaining debt on the property if your negotiator doesn't get the deficiency waived for you. 

I would say at a bare minimum she just tacked on about 8 weeks to your sale.

I'm not an attorney, and you should ALWAYS consult with one on any of the above.

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Permalink Reply by David on February 21, 2013 at 5:38am

I misunderstood.

Actually the lender did foreclose on the house.

She filed BK, which unwinds the FC and they will have to start the process all over again. Hope we can get it ss this time.

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Permalink Reply by Smitty on February 21, 2013 at 1:39pm

Ron is correct on most accounts.  She definitely must have filed right before the auction for them to have to start all over again.  He is wrong on the timeframe for Chapter 13 bankruptcy and that no one files it.  Plenty of homeowner file 13 to reorganize their debt.  Many short sale homeowners however end up converting it to Chapter 7 through the 13 process.  Many go into 13 wanting or hoping to keep their property or strip their second mortgage, but many are just too underwater to keep up with the payments.  They still must continue paying on their property in chapter 13.  The entire process  for 13 from beginning to end is appox 3 years, however, at any point they can short sale with the courts approval. Once you have court approval most lenders will then issue a discharge.  He is right in the sense than none of the lenders SHOULD be negotiating the deal while in BK but I've never had a lender once stop everything all together.  Usually they will do everything UP until the approval, but no approval until the court makes a decision.

Chapter 7 is the quicker of the two and not a reorganization of debt.  In Chapter 7 once the debt is discharge the lender will issue approval

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Permalink Reply by David on February 21, 2013 at 1:45pm

There was a redemption period and the bankr. was filed during that time so the foreclosure is voided because the lender is now subject to the automatic stay of the bankr. and now needs to show cause why they should be granted relief from the automatic stay of the brankr.

So we will see how this turns out.

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Permalink Reply by David on February 21, 2013 at 2:07pm

If a SS offer is submitted, wouldn't the lender rather take the SS than a full blown foreclosure? 

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Permalink Reply by Smitty on February 21, 2013 at 2:20pm

It's a numbers game.  If they make more in the SS they will likely take it over the FC.  They have calculations that will tell them if it is in their best interest to take a SS over a FC.

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Permalink Reply by David on February 21, 2013 at 2:25pm

Great information, thank you.

we already ss our rental deficiency waived, now this was our primary res. with a different lender and all of the sudden, boom, foreclosure.

So, hopefully we can get a ss offer and submit it and it gets accepted, if not, it will suck to have a SS and a FC instead of 2 SS. Just my opinion.

Permalink Reply by Smitty on February 21, 2013 at 2:19pm

Understood, but I just wanted to clarify the timeline from beginning to end when filing each.  I've had approval from the court in 45 days from submission to the lender which is great, but it's important that he knows what he is in for.  He is also liable if the lender doesn't release the deficiency.  His wife may not be, but he did not file for BK, so he doesn't get the protection she does.

 

Ron, I'm not trying to split hairs with you, just merely clarify your explanation.  We are on the same page.  If you notice I didn't mention which lenders negotiate during BK either.  I'm fully aware they shouldn't be negotiating, but I can absolutely tell you all of the MAJOR 5 lenders do negotiate during BK - Actually I meant approval not discharge but either way I felt it was important to clarify your comments.  I'm in your corner believe me and completely understand where you are coming from.

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