Have a short sale approved where the seller had chapter 7 BK , in the BK he had about 60K in tax liens and another $6000 in credit card judgement . Since they all attached to the property to I need to negotiate a release with the IRS and the credit card judgement holder ( Discover ) . its HAFA pre approved . What are the chances the IRS taking less ? , if the property goes to FK they get zero anyway but would they be a spoiler ?
You need to be a member of Short Sale Superstars to add comments!
**********************************
like buttons
Replies
Some CC are now being totally insane regarding this kind of transaction. They may tell you that they want all there s on the table after the IRS releases its part...(I am unsure that the CC would not have been released completely at BK anyway...it may have been perosnal and then attached to the house by lien....but if it was not related to the house (as in line of credit etc.) it may have (or shoudl have) been released and removed at bk.
You should advise your client that unless the IRS lien is close to timing out under statute of limitations....then they should pay off as much as possible to that in this process..to be rid of it. Usually the personal loands and cdredits time out much sooner....depending on the state you are in. a proper accountant or atty should be advising about this FIRST.
Regarding the CC...if they balk you can remind them that they are behind the IRS and any amount they recieve would be subject to IRS releases to begin with....and that if FC they get nothing. IF there are distributions to your client expected, then be sure and have good reason to keep them...having to move etc. Remind the CC that you are trying to help everyone and that they are just apart of the totoal solution.
P Nicolas, I meant to say...have your seller talk his BK attorney about the CC judgements "sticking" or not.
In my experience, the IRS lien will be removed from the property but will stay attached to your seller. There is an IRS process for this and can take up to thirty days.
As for the credit card liens, was the bankruptcy discharged or dismissed? If discharged, the cc debt is wiped out and a copy of the Discharge with Schedule A should suffice. If it has not been discharged but dismissed, then it will be negotiating with the cc company to release.
IRS will generally give you a full release, for nothing/minor money in a short sale (publication 783 I believe). As for the credit card judgement that may be different. I don't know what state you're in, but generally in a BK, I don't believe it's still attached, unlike a mortgage. Have your seller talk to your local attorney.