I filed a chapter 7 yr ago and added my Income property in it. I'm I still responsible for selling it ?.

Asked over 2 years ago - Downers Grove, IL

I contact my Mortgage comp todo a Loan Modification and was Approved but the condition was to risky for me. So they stated that I can do a short sell on the property should I be doing this ? I really didn't won't a foreclouser on my credit with a bankruptcy

Attorney answers (3)

  1. Elisabeth A. Mohr

    Contributor Level 8

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    Answered . Assuming that you received a discharge of your debt in the Chapter 7, and that you did not reaffirm the Mortgage for the investment property you have a couple of options.
    1. You can walk away from the property without further personal liability. There should not be tax liability on this debt because your personal liability on the mortgage note was discharged in the Chapter 7. The mortgage company would go through a foreclosure to get legal possession of the property.
    2. You can attempt to sell the property for as much a possible. The issue with this option is that mortgage company may ask you to assume personal liability for debt that you had discharged in the bankruptcy. This is usually for the difference between what you owed under the mortgage note, and what you are able to sell the property for.
    3. You can attempt to do a deed in lieu in which you give title to the property to the mortgage company without requiring them to go through foreclosure. The same issue as the short sale exist here. The mortgage company may ask for you to become personally liable for the difference in the mortgage note balance and what the current market value of the property is.

    It may simply be in your best interest to allow a foreclosure to happen in this instance.

  2. Barry Cahn Boykin

    Contributor Level 16

    2

    Lawyers agree

    Answered . Certain assumptions must be made to address this question. There was a prior Chapter 7 filing and a discharge was successfully obtained. Now the debtor faces the potential loss of income property by foreclosure and must decide whether to proceed with a "short sale".

    There must be several options still available to the debtor if the mortgage company is willing to allow a loan modification. However, there are too few facts to determine on this message board whether a short sale provides the best relief.

    It might be wise to search for a private consultation with a lawyer who is a dual professional, e.g. a lawyer who is also a CPA to help provide specific guidance on financial options.

    The information provided here should not be construed to be formal legal advice. The provision of this general... more
  3. Mitchell Paul Goldstein

    Contributor Level 20

    3

    Lawyers agree

    Answered . A foreclosure will appear on your credit. A short sale may not. Provided that the debt was discharged and no reaffirmation agreement was filed, you will not be responsible for the debt. Whether there are capital gains taxes based on purchase and sales prices, you need a tax specialist to review your information.

    A short sale will take time, but it gets any further tax or owner liability taken care of sooner than a foreclosure will.

    Mr. Goldstein is a Virginia-licensed attorney only. The information is not, nor is it intended to be, legal advice.... more

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