What Are Short Sales?
Hello, Matt McArthur, bankruptcy attorney here at Clear Counsel Law Group. A couple of years ago, we used to see a lot of short sales occurring here in the state of Nevada.
It was a very popular way of avoiding a foreclosure and getting out from under a mortgage that was attached to a house you were living in that you could no longer afford.
What a short sale essentially is shorting the bank, the money that they're owed. It doesn't refer to the time frame involved in getting these sales to go through.
They are ironically called short sales, but they tend to take much longer than a traditional sale of a home.
These short sales, they require bank approval. The bank is voluntarily agreeing to accept less than the full amount that they're owed on your mortgage.
Doing that in a bankruptcy adds another level of complication to the short sale process.
Are Short Sales Possible With a Chapter 13 Bankruptcy?
One of the questions that we've received recently is can I do a short sale if I'm in the middle of a Chapter 13 bankruptcy? The answer is yes, you can. It is possible. We do see this quite a bit, especially we saw it quite a bit a couple of years ago when people were rapidly trying to get out of these houses that were underwater.
The things that we need to make sure that we have in place in order to be able to carry out a short sale in the bankruptcy process are:
- Bank approval just like you would need outside of the bankruptcy court process.
- You also need to get the court to approve the short sale terms.
Usually the court is going look at things like did the bank provide approval?
Did the bank waive any deficiency that would associated with the sale? When we're talking about a deficiency, that's the difference between what is owed on the house and what the house actually sold for.
Since the house is selling for less than what's usually owed, there's usually a significant amount of money there that the bank would normally be entitled to under normal contract terms.
In most cases in a short sale, the banks will agree to waive this deficiency saying that they aren't going to pursue it. They're not going to try and collect and harass you get paid on this. That's one of the things that the court will look at.
These things are typically routinely granted by the court if those things are in place.
If you are underwater in a house, if you're thinking about a short sale, if you're thinking about a bankruptcy, if you're looking at a possible foreclosure, please come and see me. My name is Matt McArthur.
I used to work for the banks.
I have a lot of experience helping individuals in distressed properties at this point. I would love to be able to help you with my unique background, having worked on both sides of this issue.
Please come and see me, Matt McArthur, your bankruptcy attorney.
Hope to hear from you soon.