I am 55 yrs old, former business owner & owned commercial rental properties & recently divorced & living with my parents until I get back on my feet; In 2007 this property was worth $1M when purchased and loan was at 50% loan to value and after best efforts to save from foreclosure failed in 2010, forced to short sale at $210K in 2011. Is bankruptcy the only answer? Or is there any hope this may go away or can be negotiated down?
It is hard to imagine why it would "go away". It is a valuable asset, and even if the owner of the deficiency claim were to go out of business or into bankruptcy, the receivable would be sold. There are lots of buyers for these things, primarily debt buyers.
As for negotiating it down, unless you develop some meaningful leverage, it is not likely to be reduced much. Once reduced to judgment, the claim has a potential life of 20 years.
Bankruptcy is the only CERTAIN answer. However, at such time as the deficiency claim is made, the claim may turn out to be legally defensible, and if you wage a good defense, you then develop some negotiating power.
I am defending several deficiency claims currently, and am finding numerous defenses. I have won two completely. However, there is no way to say today what defensive opportunities (if any) may present themselves when suit is filed, so that would have to be a "wait and see". The challenge is that there is a 5 year statute of limitations on making the claim, and so lots of time yet for the owner of the deficiency claim. If you are a good candidate for bankruptcy now, but don't file, and then 3 years from now the claim is made, you may no longer have a favorable bankruptcy profile, and therefore the bankruptcy option may no longer be there.
In addition, even if the creditor were to forgive the deficiency (not that I expect that would ever happen), you would be taxed on the entire amount forgiven as income, and then would owe lots of taxes on the $300 shortage. If you discharge the debt in bankruptcy, that problem should not affect you.
I would suggest you at least speak to a good bankruptcy attorney now, to get a sense of how your current situation would look in bankruptcy. Bankruptcy can be a miraculous solution.
Please note that the above is not intended as legal advice, it is for educational purposes only. No attorney-client relationship is created or is intended to be created hereby. You should contact a local attorney to discuss and to obtain legal advice.
Chapter 11 Bankruptcy Attorney
It all depends on your disposable income and what assets you want to keep. From what I've read though, it looks like Chapter 7 works fine for you.
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It is not clear why you would want to avoid bankruptcy. It sounds like you should embrace it, especially for the avoidance of tax consequences.