My house is in a short sale & want to file BK 7
My house is listed as a short Sale and has been listed since November. I have been approved
for HAFA with IdyMac Mortgage, however I have outstanding debt I am unable to pay and need to file BK7 (already have paid lawyer) Can I go foward with BK7 and leave the house out of the Bankrupcy?
I also have a second on the house which I haven't paid for well over a year now, do I leave that out as well. My lawyer says if I file I will be basically foreclosed on very quickly.
Replies to This Discussion
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Permalink Reply by Alexandra Germon on
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I guess it depends on your state. You should consult with your attorney. In CA, if you file for BK, it will stall the foreclosure in my knowledge. Do you have any offers on your house? Are you about to close escrow? I have a good attorney contact in CA, so if you are in California, I will send you his contact info to get 2nd opinion.
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Permalink Reply by Satar Naghshineh on
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You really need to talk to a bankruptcy attorney that knows short sales. In my state of CA, if you file bankruptcy, you stall the short sale until they can lift the stay. It doesn't mean they will foreclose on you. However, that said, I believe the approval letter states that the terms of their acceptance becomes void if you file for bankruptcy. Also, did you know you can negotiate your 2nd or even wipe it out with chapter 13? Finally, depending on your situation, it might be wise to file for bankruptcy and include your short sale liens in the bankruptcy.
Like I said, I consider myself well versed in bankruptcy laws but even I say that my advice won't match up against an actual lawyer who knows your specific situation and the laws of your state.
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Permalink Reply by Michael Schneider on
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You always have the right to declare bankruptcy. As far as a short sale in concerned, upon declaring BK, if you were my client, I would probably immediately terminate my relationship with you for handling a short sale, as stated in my agreement.
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If you are in CA, short sale will settle your second lien, so you don't have to worry about t. Your agent will negotiate with all liens, they have to be settled before you can close escrow. Usually, first lien holder will pay to second, third etc up to 6% of the total debt. Sometimes, if the debt had been discharged to a collection company, they want more money to settle. Most of the time, buyers, agents and sellers (if they have money) pitch in. If you have other debt - that's a different story. Talk to your attorney or a couple of attorneys. I would not terminate my listing with you if I was your agent - short sale can be negotiated even if you are in bankruptcy. Few of my sellers are in bankruptcy now, you still can do a short sale, just takes a little longer. Make sure that your agent and your attorney communicate.
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Permalink Reply by Kevin - Greenville, SC on
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Yes, Henry, my experience also. I don't think the BK right was intended to create this outcome---neighborhood blight, abandoned property, increased loss to creditors, loss of opportunity to sell. The only one who gets anything of value is the BK attorney.
More to the point, Nancy. BK and short sale are, in my view, difference approaches to providing assistance to a homeowner. If my view, most homeowners are better of short selling the house to clear the mortgage debt, first, and then considering BK, if necessary.
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clear the mortgage debt, first, and then considering BK, if necessary. - AMEN.
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Permalink Reply by Keri Sweetland on
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It is my understanding that BK guidelines are federal not state regulated and if you file for CH7 during your short sale you don't have the choice to "keep the house out" until the trustee of the courts agrees and releases the house. You are in essence saying you can't pay your debt and requesting the courts to handle them and cancel them for you. If you open the BK, the short sale will stop and your approval will become null and void in most cases (read your letter to confirm). Short sale is an act of debt collection so the bank CANNOT enter into a debt collection agreement such as short sale while you are protected under the BK "stay"...you are APPROVED in a HAFA short sale with FULL DEFICIENCY waiver...complete the sale, collect your $3K relocation, use the money to move and then re-analyze your debt and if you still need to file BK, do what you must...as far as I have heard, you can close on this short sale since there is no deficiency and no promissory note agreements and file BK after so why not? Of course, I am not an attorney and you want to confirm this information with your attorney. Many people have worked hard on your short sale, it's good for you and all the people who are depending on you.
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