You can discharge any unsecured deficiency on your mortgage after a short sale or foreclosure in a chapter 7 if you qualify.

Answer Applies to: Georgia
Replied: 11/9/2011

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This depends several factors. For example, you may want to consider a ch. 13 if you want to save your home. Certainly, you could file a ch. 7 and simply surrender your home back to the bank. This presumes that you qualify for a ch. 7.

Answer Applies to: Virginia
Replied: 11/7/2011

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A bankruptcy would allow you to walk away from the house with further liability and no income tax liability. You would still have anywhere from 3 to 6 months to move out.

Answer Applies to: Texas
Replied: 11/7/2011

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If the mortgage is your only issue and you just want out of the mortgage, you may want to consider a transaction known as a deed in lieu of foreclosure, in addition to other options you may have explored. If you only have a first mortgage on the home, then you should be safe from collection on any portion of the debt remaining after the home is sold. If you have other debt that is also burdening you, then you may want to consider bankruptcy. This would wrap up your home and other debt into a neat package for you to discharge in bankruptcy.

Answer Applies to: Georgia
Replied: 11/5/2011

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Bankruptcy is not going to help you get a loan modification. You might need a chapter 13 to catch up on past due mortgage payments if you can not work something out with the bank and want to keep the house. If you don't want to keep the house, a purchase money first mortgage (one that has not been refinanced) is a "non-recourse loan," meaning you don't owe the bank anything if they foreclose and get less than what is owed on it. If you refinanced, or got a second mortgage after you bought the house, you will need a bankruptcy to wipe out those debts.

Answer Applies to: California
Replied: 11/4/2011

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If you qualify for a chapter 7, you can choose not to reaffirm the debt so that it gets discharged with the rest of your debt. Of course your situation will have to be evaluated to see if you qualify for a chapter 7. Or you can discuss modification with the creditor during the bankruptcy process.

Answer Applies to: Georgia
Replied: 11/4/2011

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With short sale, you have to know if the mortgage company is going to forgive or cancel the remaining debt. If not, then you might consider bankruptcy to get rid of the remaining liability. If you are in the middle of the loan modification process, you might want to wait to see if it is granted before making a decision on bankruptcy.

Answer Applies to: Minnesota
Replied: 11/4/2011

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Bankruptcy may be an option for you in addition to a loan mod or shortsale. It all depends on your entire financial situation. Speaking with a bankruptcy attorney is the best way to find out.

Answer Applies to: California
Replied: 11/4/2011

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Bankruptcy in most but not all cases is better than a short sale.

Answer Applies to: Michigan
Replied: 11/4/2011

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Bankruptcy would be a viable option is if you have a second mortgage that can be removed from the property. The second mortgage can be removed if the value of your home is worse less than the balance of your first mortgage. Otherwise, the short sale or loan modification will resolve the issue with the home instead of bankruptcy.

Answer Applies to: Colorado
Replied: 11/4/2011

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Bankruptcy may be a good option but there is a lot more information needed to evaluate your case. One important fact, among many others needed, would be to know whether you are going to retain your home or let it go to foreclosure and what other debts you might have.

Answer Applies to: California
Replied: 11/4/2011

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If your home is being foreclosed there may not be any reason to file bankruptcy. The debt goes with the property and you cannot be sued for a deficiency.

Answer Applies to: California
Replied: 11/4/2011

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Whether bankruptcy is the right option for you will depend on an analysis of the specific details of your financial situation. You should consult with a bankruptcy attorney to determine the best course of action for you.

Answer Applies to: Massachusetts
Replied: 11/4/2011

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Talk to an attorney directly. A chapter 7 or 13 bankruptcy might be great option. There are simply too many factors that have to be considered before an attorney could give you a definate answer one way or the other.

Answer Applies to: California
Replied: 11/4/2011

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Look into Chapter 13 bankruptcy.

Answer Applies to: Indiana
Replied: 11/4/2011

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A bankruptcy filed at the right time can extend your stay in the home by many months. It would also discharge your personal liability on the loan so they could not go after you for a deficiency. A short sale would likely give you less time in the home and may be a taxable event. The IRS considers 'forgiven debt" to be income.

Answer Applies to: Colorado
Replied: 11/4/2011

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It is an option, if you have other debt. If you dont have other debt then I would recommend that you look at your other options.

Answer Applies to: Florida
Replied: 11/4/2011

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All your options are very different options. The answer depends if you want to fight to keep your home or to leave. A short sale would allow you to get out of your house but you have to be careful that when it is negotiated, that you do not get a deficiency judgment. A bankruptcy will mean that after your discharge, you are no longer responsible for the note on your house, so the lender recourse for a default is only to foreclose on the house but can not go after you for a deficiency. You may be able to try to get a modification during bankruptcy, but it depends on the local rules for the district you are in. You can also try to surrender the house in bankruptcy and give it back to the lender. As you can see, you have a lot of options, but should probably go speak to a local attorney to see what is best for your specific case.

Answer Applies to: New York
Replied: 11/4/2011

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Yes. A Chapter 7 bankruptcy filing, if you are eligible to file, will discharge an liability you might have for a deficiency on a home mortgage.

Answer Applies to: Texas
Replied: 11/4/2011

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There are varying opinions on this question. In my opinion, little is to be gained from a short sale. It will damage your credit score less than a foreclosure or bankruptcy, but it will appear on your report as a short sale. If you go that route do not agree to a short sale unless the lender agrees to release you from all liability on the deficiency. I have seen several short sales where the lender did not forgive the deficiency and after the sale sued the debtor. A home loan modification may help you, but not many are actually being approved, the modification does not reduce your principal and you may be too far behind in your payments to make it feasible. You can discharge your mortgage debt in a Ch 7, live there rent free until foreclosure sale, and start over with no debt. Particularly when there is no equity in the house

Answer Applies to: Colorado
Replied: 11/4/2011

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Bankruptcy may be a useful option for you, but this is a complex question and requires further information such as your income level, the size and expense of maintaining your household and the amount you owe to creditors in total.

Answer Applies to: New York
Replied: 11/4/2011

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A bankruptcy may be a good option, depending on your particular situation. There also may be other alternatives that are less drastic - and may even be free. An initial consultation with a qualified bankruptcy attorney can do more to illucidate the proper response to your question.

Answer Applies to: Ohio
Replied: 11/4/2011

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CA is an anti-deficiency state. This means that while a second deed of trust (second mortgage) may sue you, a first deed of trust can not. Bankruptcy eliminates the collection possibly of a second deed of trust. It may be a good option for you.

Answer Applies to: California
Replied: 11/4/2011

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There are two problems with a short sale: (1) you still owe the difference between what is realized for the lender in the sale, and (2) if you don't pay it the IRS has what they call the "forgiveness of debt" doctrine, by which they treat the unpaid amount as income and assess tax on it. Many lenders, at the completion of a short sale will 1099 you for the difference, thereby alerting the IRS to assess the tax. If you file bankruptcy after the short sale the deficiency is discharged and there is a specific provision in the Internal Revenue Code which blocks the forgiveness of debt doctrine for someone who is bankruptcy.

Answer Applies to: California
Replied: 11/4/2011

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Yes, bankruptcy can be a valuable option to getting out from under an upside down mortgage. If you are able to qualify for Chapter 7, you can walk away from your home without having to go through the months of fighting with the bank over a loan modification, or face being sued for the balance due after the short sale occurs. However, sometimes bankruptcy is what you do after you tried the other two options and found that you were not successful. Regardless, I would recommend that you speak with a bankruptcy attorney to see what your options are.

Answer Applies to: Nevada
Replied: 11/4/2011

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Bankruptcy will wipe out your personal obligation in the property. Let's say you file bankruptcy now and decide afterwards that keeping your home doesn't make much sense or the bank kicks you out with foreclosure, you can then get rid of it and you won't have any personal obligation to pay the bank back. Bankruptcy won't help you keep your home unless you have enough $ to pay the arreages (back payment) and maintain the current monthly payment during over the next 5 years.

Answer Applies to: Florida
Replied: 11/4/2011

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A short sale is you selling your home for less than what you owe on it. Many times, this means you will still owe the lender money. A bankruptcy would eliminate the amount you still owe your lender after a short sale. A modification is you working with your lender to keep your home and modify your mortgage to something that you can afford. If you are able to get a successful modification, there wouldn't be a need for a bankruptcy unless you have other debt, like credit cards or medical bills that you are unable to afford.

Answer Applies to: Massachusetts
Replied: 11/4/2011

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You should call a bankruptcy attorney sooner rather than later, and definitely before you short-sale the house. One, you might be able to save the home in bankruptcy. Certainly not guaranteed, but a possibility worth at least exploring. Second, if you short-sale before the bankruptcy, you can actually make the bankruptcy much more problematic. Better to do the bankruptcy first, make sure that goes through ok, and then you can short-sale the property later on. I can't stress this enough, doing the short-sale before could cause you a lot of unnecessary problems.

Answer Applies to: California
Replied: 11/4/2011

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