Posts Tagged ‘Bankruptcy’

Question: Looking at short-sale, foreclosure, or bankruptcy… only is Social Security Disability, VA Disability (100%), and disability insurance monthly payment… what should I do? can they come after any of my income in a deficiency judgement? will they even come after me? how will bankruptcy affect me… I currently have NO assets at all except for about 15,000 dollars in savings. thanks Tom from FLORIDA

Answer: -Tom, I have to make the assumption that you’re planning on or you’ve already stopped making payments on your home or you wouldn’t be asking these questions.  A short sale in my opinion is by far the best option if you can’t sell your home for what’s owed, rent it out or can’t work out something with the bank like a forbearance or loan modification.  A short sale will affect your credit but will eliminate a foreclosure on it.  If done properly will also eliminate the possibility of a  deficiency judgment.  If a short sale is not accepted an ultimately your home ends up at the foreclosure auction, then you will either receive a 1099 or they will file a deficiency judgment against you.  If they file a deficiency judgment and you can’t pay, they can garnish wages.  Depending on the amount of the judgment, this forces most people to file bankruptcy to eliminate the judgment.

Question: I am confused if I will lose my house in Chapter 7 Bankruptcy as I am not understanding the Equity Exemption rule. My house is worth $230,000. I owe $105,000 on the first & $60,000 on a HELOC. I am unemployed and my unsecured debt is $60,000. If I file bankruptcy can the mortgage holders force me into foreclosure if I am up do date with payments? I am getting conflicting advice from attorneys.

Answer: -Unfortunately we are not bankruptcy attorneys so maybe someone else can shed some light on this topic.  I do know that a Chapter 7 is a wipe out and therefore you would liquidate all your assets to pay off all your creditors.  An attorney is hired to help “protect” those assets, like personal belongings. The trustee or attorney who represents the court and the creditors will look at all the assets (house, car, furniture, equipment) anything of value and decide what must be liquidated to pay some of the debt that was wiped out.  So depending on whether or not your home has any value, it would be in your best interest to find a good attorney or maybe even investigate different Chapters of bankruptcy’s to make sure Chapter 7 is the way to go.

Question: If I declare bankruptcy now with regard to my other debts, will it prevent the short sale from going through?

Answer: -No.  Bankruptcy only postpones an auction or short sale which buys you more time.  In fact, many short sale investors will use bankruptcy as an option if they need to buy more time so it doesn’t go to auction, as long as it’s in the best interest of the homeowner.

Question: Hello:

Please help. My father’s home recently foreclosed (last week) and our incompetent bankruptcy lawyer did not know it was important to file the bankruptcy prior to the foreclosure which would have cleared any tax consequences or deficiency judgment against him. Since my father has filed bankruptcy AFTER the foreclosure, I understand the lender will either forgive the debt and issue a 1099 to the IRS or seek a deficiency judgment. My question is, if the lender decides to seek a deficiency judgment, will the deficiency amount be discharged in the bankruptcy – although he filed the bankruptcy after the foreclosure? Please advise. Thanks!

Answer: -More than likely you won’t even have to worry about the deficiency judgment because most lenders don’t file a deficiency judgment against homeowners.  It is much more common for them to issue a 1099.  But yes, if by chance they did file a judgment against him, filing bankruptcy after foreclosure shouldn’t matter.  In fact, most homeowners will file bankruptcy after they are hit with the deficiency judgment so it will be wiped out.

Question: My home is currently on (short) sale since I can no longer afford it. I may be ultimately forced to file bankruptcy & foreclose on the house. My husband is not on the mortgage but he is on the deed. Will he become liable for paying the property taxes if I foreclose or file bankruptcy?

Answer: -If you go through foreclosure, and your lender ends up with the property, they will most likely pay the property taxes on the home if any are owed in order to try and sell it. If the short sale is approved, those taxes will be paid up as well because it will be part of the deal and the new owners will start paying the taxes from there.

Question: A condominium has gone into foreclosure the lending company has it back. The condominium has a lien on
it the lien was filed against the original owner.
The owner is about to file bankruptcy. Does the lien
stay with the condominium? Can the association still
collect when the property is sold?

Answer: – The foreclosure auction will wipe out any junior liens that are attached to the property if they don’t protect their position.  If a judgment or lien was filed against the homeowner, then it will stay with him unless he files bankruptcy, in which in most cases, liens and judgments are wiped out.  So no, the association wouldn’t be able to collect.  The only liens that don’t get wiped out are the property taxes and IRS tax liens.  Those get paid first when the property is taken back by the bank.

Question: can your home be foreclosed on if your in bankruptcy ?

Answer: –  No, not while in bankruptcy.  Bankruptcy only postpones the auction though for 6 to 8 weeks unless you file chapter 13 which is a workout option.  If you fail to meet what’s agreed upon, then the foreclosure begins where it left off.  We wrote a small article about <a href=”http://www.foreclosureuniversity.com/studycenter/freereports/options_of_homeowner.php” target=”_blank”>Bankruptcy</a> you can read more about.

Question: I have a home in WI that is still owned by my ex-husband and myself. It was in foreclosure and he filed bankruptcy, not sure what is happening now but we had a home equity line on the home, will I be required to pay that back or will the foreclosure take care of it?

Answer: -The bankruptcy will postpone the auction for approximately 2 months, then it will be released and the foreclosure process will pick up where it left off.  If no one bids at the auction, the junior lien holders have the option of filing a deficiency judgment where they can come after you for the amount lost, or they can 1099 you for the amount they lost or they will do nothing.

Question: I have a home in Arizona [anti-deficiency state] that was purchased with an 80/20 loan. I have never refinanced the loans. We were in the process of negotiating a short sale, got approval from the first [with Country Wide] and they agreed to pay the 2nd [Citi] $3k, when we went back to Citi to get final approval we discovered that they charged off the 2nd and sold the loan to a subsidiary which has now turned it over to an attorney that claims they are going to file a deficiency judgement against me and collect the debt. They claim that since it was a second mortgage and it was charged off that they can do this. It was a second but it was a “purchase money” loan. Can they come after me for the deficiency?

Answer: -  Even though Arizona is a “anti-deficiency” state, you have to meet certain requirements in order for the lender to NOT sue or file a deficiency judgment.  As with all states, those that have a trust deed as their main security instrument, it is very uncommon for the lender to file a judgment against the homeowner.  Since Arizona’s main security instrument is a “Trust Deed” then automatically deficiency judgments are very unlikely.

Now here is what the law states in Arizona…As outlined in Arizona Revised Statutes, Title 33, Chapter 6.1, a person may not be sued by his or her lender if the property is located on 2.5 acres or less and is a single family residence or duplex. This only applies if the decrease in value is not due to the home owner’s neglect and is not a VA loan.  VA is allowed to file a deficiency judgment against the homeowner, if it’s a VA loan.

Although Arizona’s “anti-deficiency” statutes prevent a lender from suing a person for any losses on a home after foreclosure, it also only applies to “purchase money” mortgages which basically means the money was used to purchase the property and not to pay off other debts.  So if you take out a 2nd mortgage or more commonly a home equity line of credit (HELOC), which is used to pay off debts, or buy personal items, then the lender may file a deficiency judgment or sue a person for any losses on a home after foreclosure.  But like I said before, since Arizona is a “Trust Deed” state it is very unlikely this will happen.  And if by chance it does, many people will file bankruptcy to eliminate the judgment once and for all.  It’s more common that the lender will simply 1099 the homeowner for the difference, however if you qualify, you can have your accountant counter the 1099 and not have to pay anything.

Question: If a judgment has been passed and your sell date is February of 2009 can you still try to sell the property before the sell date? Or does the bank now officially own the property?

Answer: -  Absolutely you can sell your home.  You should have a statement from the lender showing you the full payoff amount.  This will include all late fee, attorney fees, foreclosure fees, etc.  As long as you payoff everything, you can sell.  The only time you can’t sell is if you’re in bankruptcy.