"short sale"

malena4 · Joined: 23 Jan 2007 Posts: 9 5.89 Dollars($)

Could someone please explain what is a "short sale" I am debaing whether to file 13 or not and I have been reading in the forum and I see mention of this word. Pls advise. Thanks

larry · Joined: 27 Jun 2007 Posts: 3328 474.49 Dollars($)

Hi Malena,

In a declining housing market, the value of a home sometimes falls below what is owed on it. When you can no longer pay the amount owed, you may go for a short sale - a sale in which the proceeds fall short of what you owe. But since you're asking lender to accept less money than you promised to pay, there is no guarantee that they will accept such a sale.

For a short sale, you must find a buyer willing to purchase your house at market value. This market value can be determined by a formal appraisal. Though this process avoids the negative affect of foreclosure on your credit report, you may still face a tax liability on the amount of debt forgiven.

And, if you have a regular income, Chapter 13 may allow you to keep the property that you might otherwise lose. In Chapter 13, the court approves a repayment plan that allows you to use your income towards the payment of your debts during a three-to-five-year period, rather than surrendering the property. After you have made all the payments under the plan, you receive a discharge of certain debts.

Now, it is up to you to decide which option is best suited to you. For guidance, you can take the help of a lawyer and may consult with him.

Guest

Thank you Larry, you have been a great help.

larry · Joined: 27 Jun 2007 Posts: 3328 474.49 Dollars($)

Hi Malena,

Welcome back to the forum.

It is my pleasure to help you. If you have some more queries, please feel free to ask.

Caron

Hi Malena,

Welcome to our forums.

It's good to have you back amongst us. But I think you are into financial trouble or else why would you think of filing a Chapter 13 bankruptcy.

First of all what matters is what other ways have you tried to get yourself out of the trouble. Though chapter 13 helps you to repay your debt using an alternative payment plan, yet you don't repay it fully often and it lowers your credit score too. So, I usually suggest people to stay away from bankruptcy but then there are certain situations which perhaps we cannot avoid and then bankruptcy becomes our one and only option.

Secondly, it's the Means Test that will decide whether you can file chapter 13 or chapter 7. This is allowed as per the bankruptcy law, 2005. The court-appointed trustee decides whether your income is sufficient enough to make it possible for you to pay the entire debt or a part of it or whether you are financially not sound enough to follow a chapter 13 repayment plan.

However, you can for yourself check if you qualify for chapter 7 or 13 from the section on this topic.

good luck Smile

Guest

if i file for bankruptcy can the 2nd mortage come after me for the balance

jenkin7 · Posted: Fri Oct 30, 2009 1:40 am Post subject:

Hi andrea,

If your second mortgage debt gets discharged through chapter 7 bankruptcy, you will not be personally liable for the loan balance. However, the second lien will still remain on the property and it will have to be paid to save the house from foreclosure. In chapter 13 bankruptcy, the second lien can be stripped off your property if there is not enough equity in your house.

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