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 abandon the property. Once the trustee abandons the asset, ownership and control of the real estate defaults back to the original title holder, subject to the mortgage lender foreclosing on the property. Any debts that the debtor incurs after the bankruptcy petition filing date are considered post-petition debts that are not dischargeable in the previously filed bankruptcy.
So what is the quick answer? Completing a Short Sale before or after you file bankruptcy will eliminate any additional liabilities associated with ownership of the real estate and most importantly a Short Sale will prevent a foreclosure of a property, which has its own set of negative consequences.
For more information on Short Sales, contact www.TroyFunk.com with Keller Williams Realty on the Water in Sarasota, Florida or visit his website at www.SarasotaShortSaleBlog.com. Troy is an experienced Real Estate Broker with over 24 year of real estate experience. Troy has successfully completed over 100 bank-negotiated sales in the course of one in year in Sarasota and Manatee County, Florida area.
For more information on bankruptcy laws in your area, contact a bankruptcy attorney in your particular area, as bankruptcy laws are different in different areas. Everyone's situation is different, and contacting an attorney is prudent to verify information and to establish what is the best course of direction for your particular situation.