Foreclosure University Bankruptcy

Question:  WILL YOU EXPLAIN WHAT HAPPENS AFTER FORECLOSURE… I HAD A FORECLOSURE SINCE 2008 BUT I STILL GOT A LETTER FROM COLLECTION FOR THE AMOUNT I OWED FROM MY HELOC. MY QUESTION IS HOW COME THEY DID NOT SEND ME A 1099 FORM LIKE MY FIRST MORTGAGE DID ONE YEAR AFTER FORECLOSURE.

Answer:  -This is a great question but first lets look at the foreclosure process because I think it will help you understand why this happened.

Here’s What Happens After Foreclosure

After the foreclosure process, or lets say auction, a couple of things happen depending on what state you live in and what kind of liens were on the property. […read more]

Question:  Last October my ex-wife and I finally sold our South Florida home in a short sale. Sun-Trust held our equity line and agreed to release the lien to accommodate the sale. The balance at the time was $83,000. They agreed with a payment of $10,000 to release the lien but would not release the deficiency. A year has since past and now I received notice that they are suing me for the balance of $73,000. Am I destined to file for bankruptcy?? Any assistance would be greatly appreciated.

Greg E.

Answer:  – When a bank says they’ll “release the lien”, they still retain the rights to file a judgment against the homeowner which is what happened in this case. Usually you can offer the banks a few thousand more to completely “satisfy” the loan which means they cannot come after you for the deficient amount. (Note to those who might be going through a short sale… make sure you or whomever is doing your short sale demands a satisfaction so the bank cannot came after you) Now your options are to work out a payment plan, settle with them, or file bankruptcy. Most choose the latter.

Question:  I am in the process of filing for bankruptcy. I am filing chapter 13 so I can have my second mortgage, which is a line of credit through Bank of America, dismissed. My attorney just called and said that because my first mortgage was obtained after my HELOC, only because we refinanced, that the court may deem the HELOC as my first mortgage. Is this possible?

Question:  I owed $110,000 on a credit line; tried to sell my house, but couldn’t sell it for that amount. I walked away. I have some money in annuities and ira. Can the bank take that?

Answer:  – No they can’t take anything away from you because the property itself was pledged as collateral for the loan. All they get is the property back. What you have to watch out for is if they file a deficiency against you it the property was sold for less than the amount owed. If the file a deficiency judgment again you and you don’t have the ability to pay, the bank can then begin to garnish wages. At this point most people file bankruptcy. It is at this time where your annuities and IRA may be affected. If at all possible, try to negotiate a “deal” with the bank to get them to agree to a satisfaction which means they can’t file a judgment against you. They will just issue you a 1099.

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.