I just got off the phone with a homeowner who told me it's too late to go the route of a short sale as he has already filed for Chapter 7 BK. Not knowing what to say, I said "Oh, okay ... I guess that's that" (or something like that) and we ended the conversation.
I've looked briefly for similar conversations having to do with BK and feel that I'm still not quite understanding things. From what other pros have said on here, it sounds like the Chapter 7 is still not going to end the homeowner's problems (especially concerning credit), is that right? What advantages would this homeowner have to pursue the short sale with me? What will happen if they just do the BK and not the short sale?
Thanks in advance for all tips and advice!
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You can ss after BK is discharged. You can start the process during, but lenders won't issue approval until discharge has happened. The homeowner has to be on board and if you start the process "during' the ss, then the BK attorney should be on board too. Ive found many BK attorneys not in favor of a ss. They don't see any advantages.
I believe BK stays on record 7 years.
Here are some good articles
http://massachusettsshortsales.net/2010/10/bankruptcy-and-short-sal...
http://massachusettsshortsales.net/2012/10/how-does-bankruptcy-affe...
http://massachusettsshortsales.net/2012/12/rebuilding-your-credit-a...
You'll have to get the sale date extended through the court. Don't know the procedure and likelihood for your area.
Also, which bank/investor as someone here will have better advice for a specific bank. Maybe start a new thread with "Help with XYZ Bank...." as the title. This may not get seen by all, buried in this thread. PM the moderators, they have lots of knowledge and are always helpful.
Ummmm.. If it's in BK then usually the bank can't foreclose unless they get the stay lifted.
Just because the foreclosure wont show up on the credit, doesn't mean it didn't happen. One day that owner will try to get a new home loan - and the lender will still want to know what happened to the home after the bk. If it was foreclosed - the lender will still require standard foreclosure waiting periods ( that begin when the home forecloses - not when the bk was filed).The advantage of a short sale after a BK is to speed up the recovery time of the owner. They will get a new loan faster after a short sale than a foreclosure whether or not that loan was discharged in BK. Here in CT where foreclosure alone takes a few years to happen, that can be a time savings of several years for a new home loan.
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