Short sale deficiency after Chapter 7?

[Tifosi]

If this has been answered before I apologize.

While reading other posts a concern popped in my head that I wanted to address. We did not reaffirm our home and the foreclosure process has started. After reading that a short sale might be slightly more favorably viewed in the future we decided to list the home. As our mortgage was IIB we were not worried about any deficiency but I now wonder if a short sale changes that. Specifically, does a short sale make us liable for deficiency on previously discharged debt?

Thanks for any insight.

Michael

[tjs1970]

http://fridaycoffeebreak.com/2009/05/bankruptcy-attorneys-just-dont-give-a-crap-about-their-clients/

[justbroke]

A short sale would not make you suddenly responsible for any deficiency. The debt was discharged (IIB) in your bankruptcy.

[StartingOver08]

Well, since you are discharged from your Ch 7, why are you putting the house up for short sale?

I ask because it is common for the lenders to have you sign a NEW agreement asking you to pick up some or all of the deficiency when the short sale is approved. I see this all the time. Naturally if your debt is discharged, you would not sign the agreement (I wouldn't). But now you have just wasted another 4 to 6 months negotiating a short sale that is not going to close.

I have closed quite a few short sales, but in most instances we were able to get the note required at closing by the lender (or the MI company) either waived or significantly reduced to something manageable for the seller AND the seller has not yet filed BK.

BTW, the short sale is viewed the same as a foreclosure. I don't know how lenders will look at short sales in the future....especially since it would be after your BK. I would think it would be considered a negative to have a short sale notation on your credit report after a BK is discharged. JMO.

[Tifosi]

Thanks for the input.

I had read that going forward the time frame for a new loan was shorter with a short sale vs. foreclosure. I certainly don't want to waste time and have no desire to drag anything out. We moved out 2 weeks ago.

Cheers.