Short Sales and Chapter 13
Good morning, stars -
I had an inquiry from an owner that just received a lis pendens on his primary residence. He's going through a chapter 13 bankruptcy and, while his primary loan isn't included in the bankruptcy, his HELOC is - is this something we can sell around? His bankruptcy is apparently several years old and he'll be paying for several years to come but I don't know enough about bankruptcy to know what that means in terms of the short sale.
Replies to This Discussion
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Permalink Reply by Dean E Eshelman, CPA, CDPE, IRES on
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I have a similar situation. The seller just entered into Chap 13, included the 2nd (don't know if it is a HELOC) and wants to short sale. What is the status of the 2nd or HELOC? Do we include it and the payment he was making on the financials?
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Permalink Reply by Alex Krumm on
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bump
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Permalink Reply by Brenda Houghton on
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From what I know about doing short sales on properties in BK (have done several), the BK attorney can petition the judge to release the 2nd from the bankruptcy. However, it does cost court and legal fees to make the petition. I think then the risk is that a deficiency related to the 2nd lien short sale would not have bankruptcy protection and the homeowner could end up with a promissory note.
What does his bankruptcy attorney say?
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