When a Short Sale Gets Your Debt Forgiven

Real Estate Agent with Keller Williams Realty Louisville East (502) 664-7827

One of the biggest fears of borrowers facing foreclosure is the bank’s right to pursue them for the difference after the foreclosure is done.

A Short Sale May Relieve You Of All Obligation on the Debt

Many borrowers do not realize that a short sale could lead to full forgiveness of the deficiency. That means the borrower can put the debt behind them and never have to worry about paying any of it back.

In a short sale the lender lets the house sell for an amount SHORT of the payoff.

A short sale provides the possibility of “forgiven debt.” If the house goes all the way to the foreclosure auction, there is a higher risk of deficiency judgments against the borrowers.

Avoid Garnishments

A post-foreclosure deficiency judgment could lead to wage garnishment and the bank sweeping the borrower’s bank accounts clean. An ideal short sale can avoid that.

If you are in the Louisville, Kentucky area and you are worried about your mortgage payments, please call me any time at (502) 664-7827. It may save you tens of thousands of dollars and restore your peace of mind.

Posted by



Dave Halpern, Realtor

The Dave Halpern Real Estate Group

Keller Williams Realty Louisville East

Website David.DavidHalpernRealtor.com

(502) 664-7827



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Suzanne McLaughlin
Sabinske & Associates, Inc. (Albertville, St. Michael) - Saint Michael, MN
Sabinske & Associates, Realtor

Dave, We have had them go both ways.  Recently, it seems less likely to be "paid in full", but I suppose it could happen.

May 02, 2011 12:10 AM #1
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

I've actually had one just completed where not only the debt was forbidden, but the seller was only one month behind on the mortgage.  He's now qualified to purchase another home as his credit score only took a very small hit.

May 02, 2011 12:20 AM #2
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Suzanne - Yes, it can go either way. We usually get the coveted "full and final satisfaction" of the debt. The occasional time they keep the borrower obligated, we have gotten the banks to accept just a fraction of the remaining debt in the form of a zero interest unsecured promissory note. It happens when the seller has other assets and/or high income.

Gabe - That is great news for the seller! Everyone wins, even the short sale lender who quickly mitigated their losses.

May 02, 2011 12:47 AM #3
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Dave Halpern

Louisville Short Sale Expert
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