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Should I complete a Short Sale even if intend to file Bankruptcy?
Many Sarasota, Florida homeowners that are facing a pending Foreclosure are under the misconception that a Bankruptcy will make all their financial problems go away pertaining to a property that is going into foreclosure. However, this is not necessary true. Let's assume that a homeowner owns a property where the mortgage balance is more than what their property is worth and the homeowner does not want to own the property any longer. Filing a Chapter 7 Bankruptcy on their over-mortgaged property to surrender their property and avoid a deficiency judgment may seem like the quick and easy way out. However, the homeowner can still be liable for future financial liability after their bankruptcy and can also end up with a Foreclosure on their record, by not completing a Short Sale.
How is it possible that a homeowner filing bankruptcy can end up with additional liability after a bankruptcy? In a Bankruptcy, where a debtor has no equity in a property and no longer wants to own the property, the debtor usually will choose to surrender the collateral back to the secured lender in their bankruptcy petition. As a result of the property having no equity, the bankruptcy trustee, in many cases, will ... more
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