Bankruptcy! How Does it Effect equanimously Short Sales and http://theglutengal.com/gluten-free-recipes/halloween/scarecrow-corn-bread Loan Modifications for Costa Mesa Homes?
Sometimes when a homeowner is in the midst of a short sale or loan modification, they may decide that they must file bankruptcy.
I am often asked what effect this will have on their short sale or loan modification.
When a bankruptcy is filed, there are many things a creditor may not legally do to the person in bankruptcy. There is something called a stay put in place. Basically, this prevents creditors from taking any action against the debtor who is in bankruptcy. The creditors cannot continue with a lawsuit, a foreclosure, etc. They must wait until the bankruptcy is discharged or dismissed. In the case of a foreclosure, the bank/lender can ask that the house be removed from the bankruptcy so that it can proceed via a motion for relief from stay, which can take a few months to obtain.
It has been my experience that very little happens with a loan modification or a short sale while the debtor/seller/owner is in bankruptcy because of the strict protections in place during a bankruptcy. Banks may put the process on hold or simply close the file during the bankruptcy.
If a bank were to approve a short sale or a loan modification during a bankruptcy, it would also need court approval unless the property had been removed from the protection of the bankruptcy via the motion mentioned above.
In general, if you file a bankruptcy, you can expect that it will delay or derail your loan modification or short sale, at least during the period of the bankruptcy.
Additionally, if the property is removed from the bankruptcy and you had previously had a notice of trustee sale filed against the property, you may find yourself in a time crunch to get the sale put on hold or postponed before the auction sale occurs.
If you are in the middle of a short sale or a loan modification on your Costa Mesa home and you are contemplating bankruptcy or you have an auction sale date already set and are considering bankruptcy, please be sure that you understand all the ramifications as you make your decision.
If you have any questions, please e-mail Me or call me at 714.319.9751
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About the author: Christine Donovan is a California Residential Real Estate Broker with experience in assisting clients buy and sell residential real estate.
Are you upside down in your home? Do you owe more on your Orange County home than it’s worth, and you don’t know what to do? Are you concerned about making your mortgage payment? Contact me at christine@donovanblatt.com or 714-319-9751 to discuss your options.
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