Bankruptcy! How Does it Effect Short Sales and Loan Modifications for Costa Mesa Homes?
Sometimes when a homeowner is in the midst of a short sale or loan modification, they may decide that they must file bankruptcy.
I am often asked what effect this will have on their short sale or loan modification.
When a bankruptcy is filed, there are many things a creditor may not legally do to the person in bankruptcy. There is something called a stay put in place. Basically, this prevents creditors from taking any action against the debtor who is in bankruptcy. The creditors cannot continue with a lawsuit, a foreclosure, etc. They must wait until the bankruptcy is discharged or dismissed. In the case of a foreclosure, the bank/lender can ask that the house be removed from the bankruptcy so that it can proceed via a motion for relief from stay, which can take a few months to obtain.
It has been my experience that very little happens with a loan modification or a short sale while the debtor/seller/owner is in bankruptcy because of the strict protections in place during a bankruptcy. Banks may put the process on hold or simply close the file during the bankruptcy.
If a bank were to approve a short sale or a loan modification during a bankruptcy, it would also need court approval unless the property had been removed from the protection of the bankruptcy via the motion mentioned above.
In general, if you file a bankruptcy, you can expect that it will delay or derail your loan modification or short sale, at least during the period of the bankruptcy.
Additionally, if the property is removed from the bankruptcy and you had previously had a notice of trustee sale filed against the property, you may find yourself in a time crunch to get the sale put on hold or postponed before the auction sale occurs.
If you are in the middle of a short sale or a loan modification on your Costa Mesa home and you are contemplating bankruptcy or you have an auction sale date already set and are considering bankruptcy, please be sure that you understand all the ramifications as you make your decision.
If you have any questions, please e-mail Me or call me at 714.319.9751
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About the author: Christine Donovan is a California Residential Real Estate Broker with experience in assisting clients buy and sell residential real estate.
Are you upside down in your home? Do you owe more on your Orange County home than it's worth, and you don't know what to do? Are you concerned about making your mortgage payment? Contact me at christine@donovanblatt.com or 714-319-9751 to discuss your options.
Want to buy a home or to list your property for sale in Newport Beach, Costa Mesa, Huntington Beach or Orange County? Contact me at christine@donovanblatt.com or 714-319-9751 to learn about our system which will make your buying and selling experience easier.
Disclaimer: All information in this blog is deemed reliable but is subject to change at any time and is not guaranteed to be accurate nor are there any warantees either express or implied. This blog is not intended to offer any legal, tax or other advice.
If your home is listed, this is not a a solicitation.
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FTC Disclaimer - I am an Active Rain ambassador and might be monetarily compensated in this position. Also, this blog seeks to promote my business and may result in referrals from vendors and others discussed in this blog.
Copyright © 2009 by Christine Donovan, All Rights Reserved. Bankruptcy! How Does it Effect Short Sales and Loan Modifications for Costa Mesa Homes?
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About the author: Christine Donovan is a California Residential Real Estate Broker with experience in assisting clients buy and sell residential real estate.
Are you upside down in your home? Is it worth less than you owe? Are you concerned about making your mortgage payment? For more information see Options to Foreclosures, understanding short sales or contact me at christine@donovanblatt.com to discuss your options.
If you want to buy a home or to list your property for sale, please click Newport Beach homes, Costa Mesa homes, Huntington Beach homes or Orange County homes. Click the link if you are interested in buying a home at a courthouse auction sale.
Contact me at christine@donovanblatt.com or 714-319-9751 to learn about her system which will make your buying and selling experience easier.
Disclaimer: All information in this blog is deemed reliable but is subject to change at any time and is not guaranteed to be accurate nor are there any warantees either express or implied. This blog is not intended to offer any legal, tax or other advice.
Click Orange County homes for sale to view all OC homes for sale.
Great post with good information.
I'm going to re-blog this post for my consumers to read.
thanks!
I have had 2 short sales under agreement this year and the seller decided to file. It was a bummer for all involved!
Short sales are hard enough without adding the complexity of a bankuptcy but I guess that is the market.
Great information. We are having similar issues in our area. Thanks for the post.
Thank you for this Christine. I just spoke to someone who's going through a rough time with all of the above. If I had known what kind of help she needed months ago, I would have gladly referred her to you. Unfortunately she put her trust in someone who wasn't knowledgeable nor forthcoming. After months of not hearing from the lender regarding her loan modification, she's currently working with a good attorney she found through a good friend.
Ralph - Thanks and thanks.
Bill - This is just sad all the way around.
Gene - I think sometimes people just don't have a choice these days.
Thomas - I think this is a problem almost everywhere right now; it just depends on the degree of trouble in your area.
Carin - I appreciate that you would have referred her to me and hope that the attorney is able to help here through her difficulties.