Short Sale while in Chapter 13?

[charmd]

We are modifying our plan to surrender home.
Just can't afford the property tax, second and upkeep on house.

We are upside down on the second but not enough to have it stripped at confirmation if 2010. We have a 3rd that was stripped.

A real estate agent asked if we wanted to try a short sale. She knows we are in a chapter 13.
We met with our attorney last month to talk about surrendering the home and he said to stop making payments then wait for the lender to request a motion with the court.
I made my payment this month on the first- too afraid not to- but won't be able to pay everything next month.

Has anyone ever heard of doing a short sale while in BK 13? Or is this even a good idea?
We are current with the Trustee payments but the house is making it hard and we should have surrendered at the start of our BK.

[despritfreya]

My personal and professional opinion is trying a short sale is a waste of time and energy. Sure, the realtor has wants to try since he/she makes a commission. There is no real benefit to you. Just live in the house rent free (but for any HOA if you have one) until you are booted out. That is what I tell my clients.

Des.

[justbroke]

I agree with Des. There are very few reasons to ever consider doing a short sale. You are doing nothing helping the lender. There may be a couple of strategic reasons to do so, but if you're in a Chapter 13, I don't see any strategic reason to do it. (Perhaps, for a Chapter 7 it could be good to get the sale behind you so that your period to wait for a new mortgage is shortened.)

[charmd]

Thanks Des and Justbroke- we will modify to surrender the home like our attorney advised.
I thought we should submit paperwork to the court requesting a modification to surrender, but the attorney advised to wait until our lender request the court lift our stay and then file the paperwork. He sounds confident this is how it is done.

Won't the trustee be mad we did not notify the court we were going to be unable to make our payments and needed to surrender the home in advance?

[knitty]

but the attorney advised to wait until our lender request the court lift our stay and then file the paperwork. He sounds confident this is how it is done.

Won't the trustee be mad we did not notify the court we were going to be unable to make our payments and needed to surrender the home in advance?

We were told the same thing...no short sale, no deed in lieu of foreclosure...just wait it out. So here we are, almost 2 years of no payments and no communication from lender (HSBC). We are 15 months from discharge, then will expect to see foreclosure attempts. Crazy process.

[charmd]

Wow- did the lender request a motion for relief of stay and then do nothing to foreclose yet?

Has your trustee said anything about no payments being made? That sounds nuts to me- but thanks for the info.
Looks like you are in CA too so maybe that is how it works here with so much underwater.

[knitty]

wow- did the lender request a motion for relief of stay and then do nothing to foreclose yet?

we've heard nothing from the lender since july 2010 when we were turned down for a modification (after 2 other tries)

has your trustee said anything about no payments being made? no, not a thing...we've kept the attorney up to date and his advice is that it is better to walk away, that we have no obligation.

that sounds nuts to me- but thanks for the info.yes, it all sounds like nuts!
looks like you are in ca too so maybe that is how it works here with so much underwater. Maybe, and maybe it varies from districts to district (we're in the northeastern, trustee in sacramento)

[b]