Indiana home - reply to Blue

Guest 0.10 Dollars($)

thank you again for the info.

What is the timeframe for purchasing another home after bankruptcy? The same as foreclosure? Is a foreclosure automatic with a bankruptcy?

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Hi Dynees,

You can buy a home immediately after bankruptcy. Nowadays, there are many lenders who approve loans within one day after your bankruptcy is discharged. But it is always advisable for the borrowers to wait for at least two years to purchase home after the discharge of bankruptcy. In that case, it would be easier to qualify for a lower interest rate loan by developing a standard score in the mean time.

BTW, a foreclosure is different from bankruptcy. It cannot happen automatically with a bankruptcy.

sara · Posted: Sat Sep 15, 2007 5:29 am Post subject: RE: short sale pros and cons

Hi Dynees,

A short sale is the sale of your at a price lower than the outstanding balance on your loan. And this an option by which a borrower can pay off at least a part of the loan and avoid a foreclosure. So, the pros is, he can get rid of the loan to some extent as he still has to pay off the remaining part of the balance. And, in this process he saves his credit from going down by several points on account of short sale.

The cons is, the lender may forgive the remaining part of debt. But then you will have to pay taxes to the IRS after you get Form 1099C from the lender.

Take Care

Jessica · Last edited by Jessica on Tue Oct 09, 2007 2:06 am

Hi Dynees,

First of all, I would suggest that you avoid going for a bankruptcy. That's the worst thing you would do without exploring other options. This is because it's going to affect your credit such that for the next 7 years it would remain on your credit report. So, getting a loan, if required will not be that easy for you.

Now, considering the foreclosure or the short sale, the latter seems to be a better option. No doubt, both affects your credit but the latter takes around 1 year to come off whereas the foreclosure would remain on your credit report as long as a bankruptcy does. This does not mean you won't get credit in these years at all, but you won't be able to qualify for better rates. So, the 1-year versus the 7 years is something you need to think of. If you decide to go for a short sale, you need to get in touch with an efficient real estate agent who can help you out with the sale.

Now, when you are to inform the lender about short sale, take the help of an attorney to negotiate the short sale. Also, the attorney can negotiate with the lender as to how the short sale will appear on the credit report. Why I am saying this is because, usually short sale is noted on the credit report as "settled for less than the full balance" and this is what lowers your credit score. Often you do find lenders reporting it as "paid with no late payments" but that depends on how your attorney negotiates.

Another reason as to why a short sale would affect your credit is because the lender may issue a deficiency judgment. In such a case, the court will send you an order so that you pay for the difference between the outstanding loan balance and the home sale price.

The deficiency judgment is something, which the lender can pursue even if the debt is shown on the credit report as "paid as agreed". Now, this is where your attorney needs to negotiate. He can request the lender so that the latter sends the information to credit bureaus (for updating your report) stating that the debt has been "paid in full without deficiency judgment". It may so happen the lender can ask you to follow a repayment plan for the deficiency judgment.

As far as your latest question is concerned, well, bankruptcy isn't automatic with a foreclosure. But if one files bankruptcy while foreclosure has been declared, the latter process has to stop till the bankruptcy proceedings are on.

Once the proceedings stop, the foreclosure is carried on as usual. So, bankruptcy just stops the foreclosure for a certain time. Now, in your situation, I feel, you should go for the short sale. The question remains – "how would you pay for the remaining part?" Well, I may sound odd, but let's face it, you may have to lose some of your assets and sell them so that you can pay off the loan if at all you don't need the house. Your assets can be even an insurance policy, which you may now think of selling. There can be other options but you need to think as to which you would lose because at this moment you need to compromise somewhere.

Regards,

Jessica

dbraun22 · Joined: 24 Sep 2007 Posts: 4 2.97 Dollars($)

thank you for the info - we have no assets to sell to make up the difference.....no insurance policies, etc. Question - we are in SC and the house we are trying to sell is in IN. Which state should we find an atty to help us negotiate a short sale? The 1st lender is willing to work with us - the 2nd said they would sue us for defaulting on the loan. They want the full amount.

Caron · Posted: Tue Oct 09, 2007 2:12 am Post subject: RE: attorney for short sale

Hi Dbraun,

Welcome to our forums.

If the first lender is willing to work with you then that's great. You should find an attorney in Indiana itself as the property is located there.

You have also posted this question at http://www.mortgagefit.com/second/sue-unpaidloan.html . Just have a look at what Jessica has advised you.

Good luck

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