Can I do a short sale while in Chapter 13?
Can You Short Sell Your House While in Bankruptcy? The answer is yes you can. No matter whether you are in a Chapter 7 bankruptcy or a Chapter 13 bankruptcy case, if you want to sell the home you will not encounter any resistance from the bankruptcy court.
How does Chapter 13 affect a short sale?
Chapter 7 and Chapter 13 As Options A Chapter 7 or Chapter 13 bankruptcy will discharge any deficiency resulting from a short sale. When you file either Chapter 7 or Chapter 13 bankruptcy, the court issues an automatic stay. Any foreclosure action immediately stops.
How does a short sale work in Chapter 13 bankruptcy?
By contrast, in a Chapter 13 bankruptcy, the deficiency between the foreclosure sale price and mortgage amount will be paid out as unsecured debt, at far less than 100%. Because the debtor will still be responsible to pay some of his or her unsecured debt through the plan, a short sale that slashes this debt before bankruptcy remains beneficial.
What happens when you file a chapter 13 bankruptcy?
Chapter 13 bankruptcy allows the debtor to surrender a home, as well; however, any remaining deficiency judgment after foreclosure will be paid out as unsecured debt through the Chapter 13 plan. Huh? Let us explain. Even though the property is being surrendered, the bank is still obligated to foreclose to clear title.
What happens in a Chapter 7 foreclosure bankruptcy?
Generally, a Chapter 7 bankruptcy will eliminate all unsecured debt including deficiencies after a foreclosure. By contrast, in a Chapter 13 bankruptcy, the deficiency between the foreclosure sale price and mortgage amount will be paid out as unsecured debt, at far less than 100%.
What happens in a foreclosure after a short sale?
The foreclosure process will result in a sale of the property. If the sale price is less than what is owed on the mortgage, a deficiency judgment results. Subject to state law, outside of bankruptcy, the borrower would be personally liable for the entire amount of the judgment.
