Bankruptcy

I am talking to more and more people that do not want to short sell their home as they are filing bankruptcy.  I also am hearing that bankruptcy will not get a seller out of their troubles as the home is a secured debt?  Why is there so much confusion about this? Are the bankruptcy attorneys not telling homeowners the truth or do they not understand themselves?  I know it will remove a 2nd mortgage but unless the foreclosure occurs before the bankruptcy is discharged then the homeowner still has a home and a mortgage to deal with?  I am putting a lot of question marks behind my sentences as I am not sure about any of these statements. Can anyone tell me what the scoop is? How can I work with these customers and how can I work with these attornies?

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Permalink Reply by Brooke Stephenson on September 13, 2010 at 7:48am
Wendy, a debtor who files a bankruptcy can be discharged from a mortgage even if the foreclosure does not occur until after they receive their bankruptcy discharge. Most of the lenders in my cases do not proceed with the foreclosure until many months (up to a year) after the client has received their discharge. So long as they do not sign a reaffirmation agreement, they can even decide to walk away from the home after their bankruptcy is discharged. So, in some cases where the client is filing a chapter 7 bankruptcy the client does not have an incentive to proceed with the long drawn out short sale processs when it is going to be discharged anyway.

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