can we short sale a home surrendered in bankruptcy?

puggymoo

LoanSafe Member
Mar 26, 2010
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Surrendered our home in chapter 13 in November. Our auction date was Jan29 2011. The lender was suppose to of continued with foreclosure but because they have lawyers who did not read the papers. It said "upon confirmation the stay is lifted" and I had to tell them this. We lucked out and were discharge 3 years and 4 months early due to claims not being filed. Our home lender failed to object and only filed a secured claim. Now that we are discharged they have nothing to say.

Back to my question. Can we short sale our house w/out ramifications since it was included in BK13? Does anyone know if in Idaho they would just continue with the foreclosure or have to restart the whole process over?
 

RyanJP

LoanSafe Member
Mar 31, 2010
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If the home was surrendered in the bankruptcy and the bankruptcy was discharged without them objecting, then you are not financially responsible for the home anymore.

If the home was indeed surrendered, I wouldn't even bother with the short sale process. What's the benefit for you to work with the bank? The only plus I could see was if you were trying to move and get your name off the property for insurance purposes. If you don't HAVE to move, just stop paying and live rent free until they foreclose like they were supposed to.

I would give your BK attorney a call and confirm that the house was really surrendered, though.
 

mrange25

LoanSafe Member
Nov 1, 2009
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I surrendered my home in ch. 7. The bank also has asked me if I want to do short sale. I would advise against doing a short sale for a few reasons:

1. There are tax ramifications to a short sale: cancellation of debt, potential capital gains issues (You escaped the cancellation of debt issues with your bankruptcy, and more than likely with the capital gains) What I'm not sure of, is whether or not attempting a short sale on your discharged home could expose you again to these tax troubles. I would get a professional opinion of a lawyer or real estate lawyer.

2. As i've learned from other people on this forum, just because you WANT to do a short sale doesn't mean it will happen. A lot of times someone wants to do a short sale, but if there are no buyers or an agreement isn't reached, the home will slide into foreclosure anyway.

3. Short sales are a pain in the ass. It will take hours and hours of paperwork exchanges (your financial records, offers, etc)
 

cahomeowner

LoanSafe Member
Oct 18, 2008
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The title caught my attention. Did you actually surrender the property? If so then you have no obligation and should have received paperwork from the bank. Normally in a chapter 13 you are on a payment plan which would include your mortgage in which case you did not surrender the property. I would double check your paperwork
 

puggymoo

LoanSafe Member
Mar 26, 2010
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We surrendered the home and should of foreclosed in January but there lawyers are idiots. Needless to say they pulled out of foreclosure status and have to restart the process all over. You may surrender a home but until it is foreclosed,short sold or DIL it is still in your name. The mortgage company can sit on the house for years and we wouldn't be able to buy until 3 years after the foreclosure.. Our attorney said we can short sale w/out any recourse because we have been discharged of this debt just have to wait until we recieve the actual closing papers of BK. Our accountant said that we would be fine and wouldn't have to claim it as income because it was included in Chapter 13 and discharged.

Yes normally a chapter 13 is to save the house but if you make to much money you do not get that option. We lucked out and our big creditors did charge offs(51k) and mortgage company failed to file a unsecured claim because they did not foreclose soo we are done 3.5 years early of a 4 year term.
 

cahomeowner

LoanSafe Member
Oct 18, 2008
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I am assuming you did not qualify for chapter 7 because you did not pass the means test? since you already field BK, I was curious why not just do a Deed in Lieu? A short sale can take a long time to close.
 

RyanJP

LoanSafe Member
Mar 31, 2010
421
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We surrendered the home and should of foreclosed in January but there lawyers are idiots. Needless to say they pulled out of foreclosure status and have to restart the process all over. You may surrender a home but until it is foreclosed,short sold or DIL it is still in your name. The mortgage company can sit on the house for years and we wouldn't be able to buy until 3 years after the foreclosure.. Our attorney said we can short sale w/out any recourse because we have been discharged of this debt just have to wait until we recieve the actual closing papers of BK. Our accountant said that we would be fine and wouldn't have to claim it as income because it was included in Chapter 13 and discharged.

Yes normally a chapter 13 is to save the house but if you make to much money you do not get that option. We lucked out and our big creditors did charge offs(51k) and mortgage company failed to file a unsecured claim because they did not foreclose soo we are done 3.5 years early of a 4 year term.
I would talk to a real estate lawyer. Can you simply sign the deed over to the lien-holder and file that with the courthouse, extinguishing your responsibility?

If your mortgage was discharged in BK, and the bank failed to make any other claims, they have nothing to say (as you put it).
 
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puggymoo

LoanSafe Member
Mar 26, 2010
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Metlife won't do a DIL but will do a short sale now. They rejected 2 offers we had last year for 118/115K plus we were going to sign a promissary not for 21k paid over 5 years. They said they wanted 6k and a 15k promissary note and we wouldn't do it. This is what forced us into bankruptcy. Our realtor told us that since they can't get any money from us anyway they are alot quicker to sell the house instead of starting the foreclosure process again(stupid since they should of) and pay attorneys for more work. What is funny about this is now the house will probably sell for 89k for a total loss of 111k.

We did not pass means test with 3 individuals in ID is 53k a year and we made 105k last year but lost 15k from the previous years. We were to pay 67k over 48 months for a 100% payback no objections by metlife and no money was to be paid just surrendered.
We were lucky and 3 of our claims(credit union) did a charge off of 56k and we paid the rest and didn't have to paid trustee the 7K she would of received (only 445) paid. We did keep 2 vehicles and pay on them.
 

calgirl67

LoanSafe Member
Sep 2, 2009
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Don't agree to give them a single red cent. You filed BK for a reason.

We made over $120k a year and passed the means test... We paid a lot for a Non-Mill attorney. One who actually knew what he was doing. Worth every cent. WF can have this house back and shove it!
 

fighton

LoanSafe Member
Dec 10, 2010
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I have been trying to work with Chase to get a loan mod for over 1 year and been getting the same run around and denied twice. I'm so over this... 200k underwater, neighborhood with foreclosures and short sales, 80k Heloc, too far to drive now with gas prices going up. Filed BK CH7 just recently and now the banks can go pound sand and have the house. I was foolish to hope that the banks would help me keep the house. I am at peace with my decision now and will play the game until the house gets forclosed on. Shortsale, Hamp etc.. save my money and buy only cash now. No more slave of the banks I am free at last.
 

SurfwhenUcan

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Apr 23, 2010
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Sunny San Diego
The mortgage company can sit on the house for years and we wouldn't be able to buy until 3 years after the foreclosure.
The first assumption you make here is a worst worst case scenario and isn't going to take that long. The second assumption you make is quite an optimistic one indeed and actually requires the use of a crystal ball to see what conditions, rates, guidelines (and lenders) prevail 3 yrs from now. Don't worry about it.

Stay in the house rent free and save as much money as possible for as long as possible. Or, if you have enough money sitting around and don't want to live rent free, and you really want them to foreclose, call them every single day screaming and crying about how much you want to save your home. Beg, sob and plead for a modification. Ask them "What would Jesus do?" They'll sell that house out from under you by Christmas.
 

puggymoo

LoanSafe Member
Mar 26, 2010
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Moved to a rental house last July when the short sales were suppose to close. We now are living in our second rental. We paid 850 for a house that was crap to rent now paying 1100 for a house on 1.7 acres and is 2000 sq feet. We just want the house gone since it has been vacant and locks changed for almost a year.