How Does Bankruptcy Affect a Short Sale and How You Could Lose Thousands of Dollars?

How Does Bankruptcy Affect a Short Sale and How You Could Lose Thousands of Dollars?

The Homeowner is in Bankruptcy Attorney. Let's discuss the two typical types of bankruptcies that you may encounter.

Chapter 7 - know as Liquidation

Chapter 13 - known as Reorganization

With either type you are going to have to contact the Trustee of the Bankruptcy Attorney to manage the debt situation for the homeowner until it is discharged or dismissed.

The only way you can get the deed legally is stop the Bankruptcy Attorney and tell them you have interest in buying the house. Most of the time if they deem the property has equity, they WILL NOT release it. That's why it is vital to communicate with them about doing a short sale and the property it's not worth what is owed on it. Therefore it essentially has negative equity. I have been through this process a lot and can tell you it IS NOT EASY...but doable. You will need to have all your contractor reports, appraisals, supporting documents ready to send to the Bankruptcy Court Trustee at a moments notice.

In my experience, it usually takes a minimum of 20 days before you get an answer. That is of course if they are not backed up with other files in front of yours which is like...never. Before attempting this make sure the property you're dealing with has a significant upside to it. I'd say at least ,000 profit or you're probably wasting your time. It can be profitable, but you must pick and choose your battles. Be sure and keep a pulse on how much time you have before the sheriff sale too.

If the Bankruptcy Court Trustee agrees to release the property from the bankruptcy you can expect the foreclosure process to begin very quickly. Keep a pulse on how much time you have to get it closed. It is best to have the buyer ready to go before getting the property released.

With cases in bankruptcy, I usually get the deed and all the other documents signed, but I DON'T FILE THE DEED until I know the bankruptcy is complete or dismissed.

One other thing: EVEN IF... the BK has been dismissed some title companies still need the "Affidavit" mentioned above filed by the attorney that filed the BK for the homeowner...or use another attorney, in order to get clear title.

I hope this helps.

Friends Link : Is Bankruptcy Right For You?