Replies to This Discussion

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on December 15, 2010 at 2:32pm

Luis,

Once the seller files BK, Chase can no longer work on the short sale and can no longer speak with you.  You can keep the house on the market all you want and get offers, but nothing can be done until the BK is Discharged completely - EXCEPT if the house is 1) not included in the BK or 2) is removed from the BK.

 

I don't blame the buyer for bailing-out, it will take too long to resolve. 

 

You are in for a long road on this one - probably another 6 months.

 

Best of Luck,

Thom Colby

Broker

Newport Beach CA

Permalink Reply by Luis Cardozo on December 15, 2010 at 2:45pm

Thank you, Thom. This is helpful.

Thom Colby said:

Luis,

Once the seller files BK, Chase can no longer work on the short sale and can no longer speak with you.  You can keep the house on the market all you want and get offers, but nothing can be done until the BK is Discharged completely - EXCEPT if the house is 1) not included in the BK or 2) is removed from the BK.

 

I don't blame the buyer for bailing-out, it will take too long to resolve.

 

You are in for a long road on this one - probably another 6 months.

 

Best of Luck,

Thom Colby

Broker

Newport Beach CA

Permalink Reply by Wendy Smith on December 15, 2010 at 3:01pm

Why?  What benefit is for your seller to file CH7 before the short sale? Does he not recognize your work, the buyers agent work, the buyers patience.....it wont hurt him at all to go thru with the short sale and allow the other parties to complete the transaction (assuming primary residence)

Doesn't the seller recognize the work you have done for him?  to file a BK (in this case) before the closing is a slap in the face.  Credit card debt will wait.  There is more to think about than just himself.

Permalink Reply by James ferebee jr on December 15, 2010 at 4:45pm

Wendy if the credit card liens are on the property he will not be able to close on it unless the credit card card co's issue a release of lien so that he can close. AMEX wants 10K who is suppose to come up with the 10K the buyer..???

This is a dead deal if the card co's will not issue an approval and the seller is filling the BK because he can't pay the money. I would assume the agent is not going to pay it so the BK is a good thing for the seller to get them off his back.

You can always come back and do the short sale after the card co's get wiped out.

All the hard work from the agent is squat unless the card co's issue approvals...

Jim

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on December 15, 2010 at 6:31pm

Wendy -

 

You said "credit card debt will wait..."   I guess I don't understand that comment.....  AMEX and Discover both have liens against the property.  How is the seller going to transfer title without these liens being released?  Why would AMEX and Discover release without a settlement paid that they are willing to accept?

I don't particularly like BK, but this seller has two choices - he is saddled with debt and liens against the property - so the other choice is foreclosure which is never a good choice.

 

Best,

Thom Colby

Broker

Newport Beach CA

Harry Clay said:

I find many distressed property owners to be unable to think clearly beyond literally a month or two past the present.

I have witnessed sellers do irrational things, like declaring bankruptcy prematurely, that I can't really argue about, because they were advised by an attorney, & I'm just the Realtor.

I recently watched a middle aged single Mom, who lost her job, go BK over a $60K second, but get back on board with a temporary modification of her $200,000 1st mortgage, on a house that was already short sale approved @ $114K...all because the attorney (who charged her $3K for his services) convinced her it was a smart move.

I tried to suggest to her that she was simply rebuying into an only slightly less Toxic Loan on an old house with a lot of deferred maintenance & upcoming repair issues, & that she would more likely be better off getting completely out of debt, & moving back with her elderly parents rent free while she got back on her feet...but she insisted she didn't want to lose her house, no matter how temporary the solution would prove to be. 

The attorney made his $3K, she filed Chapter 13 to kill the 2nd, the approved short sale went up in smoke...& I predict she will soon enough find herself in default again, probably culminating about the time that the Mortgage Debt Relief Act expires, & her next default will become a taxable event, & she will have already used up her bankruptcy rights.

But she says she really doesn't want to think that far into the future, because it gives her a headache.

 
Wendy Smith said:

Why?  What benefit is for your seller to file CH7 before the short sale? Does he not recognize your work, the buyers agent work, the buyers patience.....it wont hurt him at all to go thru with the short sale and allow the other parties to complete the transaction (assuming primary residence)

Doesn't the seller recognize the work you have done for him?  to file a BK (in this case) before the closing is a slap in the face.  Credit card debt will wait.  There is more to think about than just himself.

Permalink Reply by Jeff Payne on December 16, 2010 at 2:58am

Thom, the liens needing to be paid depend on the state that you are in.  In Florida we have homestead laws..... I closed on yesterday that had 2 liens attached and the title insuror did not need them to be cleared to issue title insurance because it was the sellers homestead, thank goodness :)

Thom Colby said:

Wendy -

 

You said "credit card debt will wait..."   I guess I don't understand that comment.....  AMEX and Discover both have liens against the property.  How is the seller going to transfer title without these liens being released?  Why would AMEX and Discover release without a settlement paid that they are willing to accept?

I don't particularly like BK, but this seller has two choices - he is saddled with debt and liens against the property - so the other choice is foreclosure which is never a good choice.

 

Best,

Thom Colby

Broker

Newport Beach CA

Harry Clay said:

I find many distressed property owners to be unable to think clearly beyond literally a month or two past the present.

I have witnessed sellers do irrational things, like declaring bankruptcy prematurely, that I can't really argue about, because they were advised by an attorney, & I'm just the Realtor.

I recently watched a middle aged single Mom, who lost her job, go BK over a $60K second, but get back on board with a temporary modification of her $200,000 1st mortgage, on a house that was already short sale approved @ $114K...all because the attorney (who charged her $3K for his services) convinced her it was a smart move.

I tried to suggest to her that she was simply rebuying into an only slightly less Toxic Loan on an old house with a lot of deferred maintenance & upcoming repair issues, & that she would more likely be better off getting completely out of debt, & moving back with her elderly parents rent free while she got back on her feet...but she insisted she didn't want to lose her house, no matter how temporary the solution would prove to be. 

The attorney made his $3K, she filed Chapter 13 to kill the 2nd, the approved short sale went up in smoke...& I predict she will soon enough find herself in default again, probably culminating about the time that the Mortgage Debt Relief Act expires, & her next default will become a taxable event, & she will have already used up her bankruptcy rights.

But she says she really doesn't want to think that far into the future, because it gives her a headache.

 
Wendy Smith said:

Why?  What benefit is for your seller to file CH7 before the short sale? Does he not recognize your work, the buyers agent work, the buyers patience.....it wont hurt him at all to go thru with the short sale and allow the other parties to complete the transaction (assuming primary residence)

Doesn't the seller recognize the work you have done for him?  to file a BK (in this case) before the closing is a slap in the face.  Credit card debt will wait.  There is more to think about than just himself.

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on December 16, 2010 at 5:11am

Jeff -

 

You are absolutely correct !  My bad, and I should have remembered ....... I used to actively sell in Texas where they also have a Homestead Law.  But after selling in CA for so long I just lost track !  Thanks for the correction.

 

Best,

Thom Colby

Newport Beach CA

Jeff Payne said:

Thom, the liens needing to be paid depend on the state that you are in.  In Florida we have homestead laws..... I closed on yesterday that had 2 liens attached and the title insuror did not need them to be cleared to issue title insurance because it was the sellers homestead, thank goodness :)

Thom Colby said:

Wendy -

 

You said "credit card debt will wait..."   I guess I don't understand that comment.....  AMEX and Discover both have liens against the property.  How is the seller going to transfer title without these liens being released?  Why would AMEX and Discover release without a settlement paid that they are willing to accept?

I don't particularly like BK, but this seller has two choices - he is saddled with debt and liens against the property - so the other choice is foreclosure which is never a good choice.

 

Best,

Thom Colby

Broker

Newport Beach CA

Harry Clay said:

I find many distressed property owners to be unable to think clearly beyond literally a month or two past the present.

I have witnessed sellers do irrational things, like declaring bankruptcy prematurely, that I can't really argue about, because they were advised by an attorney, & I'm just the Realtor.

I recently watched a middle aged single Mom, who lost her job, go BK over a $60K second, but get back on board with a temporary modification of her $200,000 1st mortgage, on a house that was already short sale approved @ $114K...all because the attorney (who charged her $3K for his services) convinced her it was a smart move.

I tried to suggest to her that she was simply rebuying into an only slightly less Toxic Loan on an old house with a lot of deferred maintenance & upcoming repair issues, & that she would more likely be better off getting completely out of debt, & moving back with her elderly parents rent free while she got back on her feet...but she insisted she didn't want to lose her house, no matter how temporary the solution would prove to be. 

The attorney made his $3K, she filed Chapter 13 to kill the 2nd, the approved short sale went up in smoke...& I predict she will soon enough find herself in default again, probably culminating about the time that the Mortgage Debt Relief Act expires, & her next default will become a taxable event, & she will have already used up her bankruptcy rights.

But she says she really doesn't want to think that far into the future, because it gives her a headache.

 
Wendy Smith said:

Why?  What benefit is for your seller to file CH7 before the short sale? Does he not recognize your work, the buyers agent work, the buyers patience.....it wont hurt him at all to go thru with the short sale and allow the other parties to complete the transaction (assuming primary residence)

Doesn't the seller recognize the work you have done for him?  to file a BK (in this case) before the closing is a slap in the face.  Credit card debt will wait.  There is more to think about than just himself.

Permalink Reply by Ute Ferdig on December 16, 2010 at 5:38pm

Seems like a dead deal to me for now.  I don't think a chapter 7 bk will do nothing to remove credit card liens because a chapter 7 discharges only unsecured debt, but does not strip bk property of liens if the property is the primary residence.  Unless the property is removed from the bk estate, nothing will happen until the bk discharge.  If there is no equity in the house at all, the seller's bk attorney could ask the bk trustee to remove the house from the bk estate and the trustee should not have a problem with that since the house is worthless for creditors of unsecured debts.  If the seller does not want to go through the trouble and potential extra expense of asking the trustee to release the property prior to the discharge, you'll have to wait to do the short sale after the bk discharge, but you'll still have to deal with credit card liens and since you mention that the seller is expecting $3,000 in relocation money, I have reason to believe that this is a HAFA short sale which would cap the payoff of all liens at $6,000.  Maybe, AMEX and Discover will be willing to settle for that after the bk since the know that's the only way they'll get anything.

Permalink Reply by Luis Cardozo on December 16, 2010 at 6:14pm

Jeff,

The homestead law is interesting. I will look into that.

Thanks.

Luis

Thom Colby said:

Jeff -

 

You are absolutely correct !  My bad, and I should have remembered ....... I used to actively sell in Texas where they also have a Homestead Law.  But after selling in CA for so long I just lost track !  Thanks for the correction.

 

Best,

Thom Colby

Newport Beach CA

Jeff Payne said:

Thom, the liens needing to be paid depend on the state that you are in.  In Florida we have homestead laws..... I closed on yesterday that had 2 liens attached and the title insuror did not need them to be cleared to issue title insurance because it was the sellers homestead, thank goodness :)

Thom Colby said:

Wendy -

 

You said "credit card debt will wait..."   I guess I don't understand that comment.....  AMEX and Discover both have liens against the property.  How is the seller going to transfer title without these liens being released?  Why would AMEX and Discover release without a settlement paid that they are willing to accept?

I don't particularly like BK, but this seller has two choices - he is saddled with debt and liens against the property - so the other choice is foreclosure which is never a good choice.

 

Best,

Thom Colby

Broker

Newport Beach CA

Harry Clay said:

I find many distressed property owners to be unable to think clearly beyond literally a month or two past the present.

I have witnessed sellers do irrational things, like declaring bankruptcy prematurely, that I can't really argue about, because they were advised by an attorney, & I'm just the Realtor.

I recently watched a middle aged single Mom, who lost her job, go BK over a $60K second, but get back on board with a temporary modification of her $200,000 1st mortgage, on a house that was already short sale approved @ $114K...all because the attorney (who charged her $3K for his services) convinced her it was a smart move.

I tried to suggest to her that she was simply rebuying into an only slightly less Toxic Loan on an old house with a lot of deferred maintenance & upcoming repair issues, & that she would more likely be better off getting completely out of debt, & moving back with her elderly parents rent free while she got back on her feet...but she insisted she didn't want to lose her house, no matter how temporary the solution would prove to be.

The attorney made his $3K, she filed Chapter 13 to kill the 2nd, the approved short sale went up in smoke...& I predict she will soon enough find herself in default again, probably culminating about the time that the Mortgage Debt Relief Act expires, & her next default will become a taxable event, & she will have already used up her bankruptcy rights.

But she says she really doesn't want to think that far into the future, because it gives her a headache.

Wendy Smith said:

Why?  What benefit is for your seller to file CH7 before the short sale? Does he not recognize your work, the buyers agent work, the buyers patience.....it wont hurt him at all to go thru with the short sale and allow the other parties to complete the transaction (assuming primary residence)

Doesn't the seller recognize the work you have done for him?  to file a BK (in this case) before the closing is a slap in the face.  Credit card debt will wait.  There is more to think about than just himself.

Permalink Reply by Luis Cardozo on December 16, 2010 at 6:19pm

Thanks, Ute.

I consulted a California lawyer. He said that the seller can ask his BK lawyer to remove the liens during the filing. I suggested this to my seller.

Luis

Ute Ferdig said:

Seems like a dead deal to me for now.  I don't think a chapter 7 bk will do nothing to remove credit card liens because a chapter 7 discharges only unsecured debt, but does not strip bk property of liens if the property is the primary residence.  Unless the property is removed from the bk estate, nothing will happen until the bk discharge.  If there is no equity in the house at all, the seller's bk attorney could ask the bk trustee to remove the house from the bk estate and the trustee should not have a problem with that since the house is worthless for creditors of unsecured debts.  If the seller does not want to go through the trouble and potential extra expense of asking the trustee to release the property prior to the discharge, you'll have to wait to do the short sale after the bk discharge, but you'll still have to deal with credit card liens and since you mention that the seller is expecting $3,000 in relocation money, I have reason to believe that this is a HAFA short sale which would cap the payoff of all liens at $6,000.  Maybe, AMEX and Discover will be willing to settle for that after the bk since the know that's the only way they'll get anything.

Permalink Reply by Ute Ferdig on December 16, 2010 at 6:29pm

I have heard of lien stripping only in the context of a chapter 13 bk, not a chapter 7.  Here is a link to an interesting article on this subject.  http://goldsteinandclegglaw.com/bankruptcy_blog/?p=37  Let us know what happens.

Luis Cardozo said:

Thanks, Ute.

I consulted a California lawyer. He said that the seller can ask his BK lawyer to remove the liens during the filing. I suggested this to my seller.

Luis

Ute Ferdig said:

Seems like a dead deal to me for now.  I don't think a chapter 7 bk will do nothing to remove credit card liens because a chapter 7 discharges only unsecured debt, but does not strip bk property of liens if the property is the primary residence.  Unless the property is removed from the bk estate, nothing will happen until the bk discharge.  If there is no equity in the house at all, the seller's bk attorney could ask the bk trustee to remove the house from the bk estate and the trustee should not have a problem with that since the house is worthless for creditors of unsecured debts.  If the seller does not want to go through the trouble and potential extra expense of asking the trustee to release the property prior to the discharge, you'll have to wait to do the short sale after the bk discharge, but you'll still have to deal with credit card liens and since you mention that the seller is expecting $3,000 in relocation money, I have reason to believe that this is a HAFA short sale which would cap the payoff of all liens at $6,000.  Maybe, AMEX and Discover will be willing to settle for that after the bk since the know that's the only way they'll get anything.

Permalink Reply by Luis Cardozo on December 17, 2010 at 3:37am

Ute,

The article is confusing. At first, the Lawyer is referring to unsecured lien stripping then he changed it to secured lien or second mortgage stripping and finally at the end he referred again to mortgage debt stripping. I think, this article is about secured or second mortgage stripping. What do you think?

Luis

Ute Ferdig said:

I have heard of lien stripping only in the context of a chapter 13 bk, not a chapter 7.  Here is a link to an interesting article on this subject.  http://goldsteinandclegglaw.com/bankruptcy_blog/?p=37 Let us know what happens.

Luis Cardozo said:

Thanks, Ute.

I consulted a California lawyer. He said that the seller can ask his BK lawyer to remove the liens during the filing. I suggested this to my seller.

Luis

Ute Ferdig said:

Seems like a dead deal to me for now.  I don't think a chapter 7 bk will do nothing to remove credit card liens because a chapter 7 discharges only unsecured debt, but does not strip bk property of liens if the property is the primary residence.  Unless the property is removed from the bk estate, nothing will happen until the bk discharge.  If there is no equity in the house at all, the seller's bk attorney could ask the bk trustee to remove the house from the bk estate and the trustee should not have a problem with that since the house is worthless for creditors of unsecured debts.  If the seller does not want to go through the trouble and potential extra expense of asking the trustee to release the property prior to the discharge, you'll have to wait to do the short sale after the bk discharge, but you'll still have to deal with credit card liens and since you mention that the seller is expecting $3,000 in relocation money, I have reason to believe that this is a HAFA short sale which would cap the payoff of all liens at $6,000.  Maybe, AMEX and Discover will be willing to settle for that after the bk since the know that's the only way they'll get anything.