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Bankruptcy

Release of lien vs. loan satisfaction

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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.

Arizona rental foreclosed on

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Question:  I live in California but owned a rental in Arizona that was foreclosed on. I had an equity line of credit on that home when it was foreclosed on. I believe I owed about $90K on that equity line of credit. Can they now come after me for the money? Is my only recourse bankruptcy?

 

Answer:

Well all you can do it wait and see what the bank sends you in the mail. They will either send you a 1099 or they will send you a judgment for the $90k. Now, I know that Arizona is a anti-deficiency state, however, there are 2 statutes that apply to foreclosure and in a lot of cases, homes that have 2nd mortgages do not fall into the category of either of these statutes because the money was not used in the purchase of a home. You might be able to work out a settlement with the bank especially if you threaten them with the bankruptcy card. A good attorney can help you with that. Worst case, most people just bk.

I wish you would have found us earlier… you could settle your note as well and save a lot of headache. Good Luck

Filing for bankruptcy. My second mortgage, now my first?

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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?

In Florida. Purchased another home. Foreclosing on 1st home.

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Question:  In Florida. Lots of stuff going on and now the MI says today they need a take it or leave it answer with no negotiation by close of business Friday. Son no longer lives in house that has mortgage insurance on it that the lender has accepted a short sale contract on and forwarded to the MI. He has purchased another house and just stopped making payments on the other in September. The MI says that they want 42000 over ten years 0% interest starting 2/12 or they will foreclose. (Doesn’t the lender do that?) He has some cash but has a baby due at Christmas that requires 20000 out of pocket at least, assuming no emegencies, because of crappy insurance. He made less this year than last but more last year than in 2009. The short sale contract and the appraisal are 89000 and the mortgage is in the high 150s give or take a few thousand. Not sure what the least expensive thing is to do but 42k is a lot more than he will have in the bank after the baby comes and no one wants to pay an extra $350 a month for 10 years to compensate them for a mutually bad investment. I am thinking ask the lender to do a deed in lieu so there is no deficiency and then file a 982 I think it’s called to get around that. If they don’t take the deed in lieu, then file for bankruptcy to get out of the deficiency but since I have little experience with this I need some advice that may help resolve this better than my solutions.

Answer:  – The least expensive thing to do is file bankruptcy. It will cost him $1500 and he can start over from scratch. A lot of lenders, when you tell them you are going to file, will work with you to find a solution. A better option might be to get an attorney or good real estate agent / short sale negotiator to help you push the short sale through with a full satisfaction meaning they can’t ask for any money to be paid back. The loan would be paid in full. Your son would receive a 1099 which would be negated with form 982 as mentioned. Don’t let the bank push you around… unfortunately they deal with homeowners a lot differently than an attorney or 3rd party negotiator because they automatically assume the homeowner doesn’t know what they are doing.

short-sale, foreclosure, or bankruptcy… what should I do?

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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.

Chapter 7 Bankruptcy and Equity Exemption rule.

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Question: I am confused if I will lose my house in Chapter 7 Bankruptcy as I am not understanding the Equity Exemption rule. My house is worth $230,000. I owe $105,000 on the first & $60,000 on a HELOC. I am unemployed and my unsecured debt is $60,000. If I file bankruptcy can the mortgage holders force me into foreclosure if I am up do date with payments? I am getting conflicting advice from attorneys.

Answer: -Unfortunately we are not bankruptcy attorneys so maybe someone else can shed some light on this topic. I do know that a Chapter 7 is a wipe out and therefore you would liquidate all your assets to pay off all your creditors. An attorney is hired to help “protect” those assets, like personal belongings. The trustee or attorney who represents the court and the creditors will look at all the assets (house, car, furniture, equipment) anything of value and decide what must be liquidated to pay some of the debt that was wiped out. So depending on whether or not your home has any value, it would be in your best interest to find a good attorney or maybe even investigate different Chapters of bankruptcy’s to make sure Chapter 7 is the way to go.