shortsale on a mortgage discharged in bankruptcy?

This is a new one on me. I am hoping someone has experience with this.  I have a listing appointment with a couple who had a bankruptcy about 4 years ago, in which at least their first and I think their home equity mortgages were discharged.  They have made timely payments ever since in order to be able to stay in the home.  So now, they need to sell, or at least to relocate, and are considering a short sale.

I don't quite know how to deal with that, as all they really have to do is walk away, right?  Would a short 

sale be feasible? possible? workable? even available? under these circumstances?

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Permalink Reply by Wayne Brooks on September 5, 2012 at 10:07am

Not an attorney, but if the bankruptcy was 4 years ago, sounds like a chapter 13, AND the home was released from the bankruptcy-taken out and the debt retained/reaffirmed by the owners.  I'm not saying it right, but they declared bankruptcy on everything Except the house.  So, in that case it should be a normal short sale.  It seems like if that were not the case, the lender would  have foreclosed long ago.

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on September 6, 2012 at 5:28am

When the continued to make payments they reaffirmed the debt.  It is unlikely the mortgages (especially the 1st) was wiped-out.  Handle it as a typical short sale. 

 

I am not an attorney, this is merely an opinion and should nto be interpreted as legal advice.  You can also get a copy of their BK filing and discharge on line if they cannot find it.

Permalink Reply by Minna Reid on September 6, 2012 at 8:58am

Continuing to make payments does NOT reaffirm the debt. It just stops the lender from foreclosing as lenders dont foreclose on performing loans. Proceed as with any other short sale. I have done a bunch of these and they are no different from any short sale. If in fact the debt was discharged they can just walk away with no financial recourse, but the lender wil still have to foreclose to get possession - and your clients will still end up foreclosed on. If they wish to get a new mortgage anytime within the next several years, they are much better off with a short sale than a foreclosure. The waiting time for a new loan is much shorter with a short sale, and yes a new lender will want to see what happened to that house after the bankruptcy. 

Permalink Reply by Jill Ford on September 6, 2012 at 1:52pm

Thanks y'all.  I feel a little more capable of handling my appointment tomorrow morning!!

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