Bankruptcy AFTER Shortsale?

[livingincalv]

Hello all,

I'm new to this forum and have tried to find information about my specific inquiry. I've found posts about filing for bankruptcy BEFORE completing a shortsale. My question is the reverse: I completed a short-sale first and am wondering if I should now file for bankruptcy.

In April 2010, I completed a shortsale. In the final agreement, the lender included the verbiage, "the lender or the mortgage insurance company retains rights to file a deficiency". Initially, the only reason why I agreed to the shortsale was the lender's pre-approval included promise to forgive debt. My real estate lawyer told me to complete the short sale regardless. Although he couldn't get the lender to change the verbiage, he assured me that I have enough documentation to later sue them for subterfuge.

In any case, I'm left feeling discomfort and desire to protect my and my newly wedded husband's future. The property was in LV, NV so I have 6 year until April 2016 for the statute of limitations (SOL) to expire.

Here are my problems:

1) My debt might fall on my husband because I got married in 2009 (the property's title and loan was only under my name). We signed a prenup keeping everything seperate, although I neglected to file it in the county recorder. We file taxes married but seperately.

2) If either the lender (By the way, I had only 1 mortgage) or mortgage insurance company files a deficiency judgement, I will owe $230,000.

3) I have a net worth of $-290,000.

Here are some marginally "good" things in my case:

1a) For 2010 taxes, I probably won't owe taxes on the $230,000 cancellation of debt. (I don't qualify for forgiveness due to primary residence, only for insolvency. The lender considered the property as investment property, even though initially it was my primary residence and it was never rented out).

2a) I'm a teacher/social worker and have been unemployed for 3 months. If another 3 months of employment passes, I might be able to file for Ch.7 easily. (However I'm young and I'm sure if the lender or PMI could get a 40 year judgement on me to pay out the rest of my life, I'm sure they would!)

Here are my questions:
1b) Should I file for bankruptcy and if so, when? Will this action ward off judgements for good? Even though there may be no deficiency judgement looming as of yet, this is the first time I've been unemployed and may be able to make it work to my advantage. Eventually, I plan to get work, even if its doing menial jobs.

2b) My husband wishes to buy property as the sole owner and loan holder (I would quitclaim). What can he/we do to protect him from my IRS liens or lender/PMI judgements?

Any help in these areas is much appreciated. Thanks for reading and responding!

[goodyphilips]

Well if the lender has promised that it will not push for the deficiency claim then i think there should not be a immediate cause of worry and more over your lawyer has also assured you in this regard. so for now do not think about going for bankruptcy, any ways your net worth is greater than the amount deficient.
Since you and your husband have kept your things separate then i don't foresee any problem in acquiring a property on his, though consulting a lawyer would be much more beneficial in this regard.

[livingincalv]

Thank you goodyphilips for your reply. I had an appointment today with a bankruptcy lawyer and she indicated that filing for Ch. 13 BK would be a way to avoid tax assessment for the cancellation of debt.

Initially, she thought it wouldn't be a good idea to file BK especially since there is no judgement yet and I have little unsecured debt. But when I told her more about the situation and my husband's income, she said that pre-emptively filing could help me avoid the tax consequences of the cancellation of debt on the investment property and could force the lender or the mortgage insurance company to come after me now...as opposed to 6 years from now. The philosophy "if you want my money, come get what I can offer now...not later when my financial situation will be much better."

I just don't know what to do. Hope and cross my fingers that the IRS will be gentle with me (what if I can't prove that I'm insolvent?) and that the lender and mortgage company will forget me while I lie low --OR-- premptively give the lender and PMI a target.

Here's some numbers:

If I file BK now, and all my creditors file a claim, I would pay $400+ for 5 years or about $28,000.

Or, if I wait to get 1099'ed, get tax assessed, & can't prove insolvency, then I will own the IRS $80,000 for as long as they want to collect.

Any input or similar experience?