Can I file bankruptcy after starting a short sale?

Filing bankruptcy will cancel any pending short sale and will delay getting a new short sale by several months. I would recommend that you complete the short sale, then file bankruptcy.

You can file bankruptcy after starting the short sale process. The question is why you may want to file bankruptcy? Short sales may help you buy another home in the future. Short sales may also cause you to have a tax liability from "forgiveness of indebtedness" income taxes. The lender agreeing to the short sale may also demand a judgment against you as a condition of agreeing to the short sale. The real estate agent and the lender always come out ahead. The reason is the agent gets a commission. The lender will not accept a short sale if less is received from the short sale than the lender believes it will receive after completing a foreclosure. You need to consult with an attorney to determine what is in your best interest. I expect the real estate agent and the lender who are knowledgeable about this situation to look after their interest. You need an attorney who will look out for your interest.

The latter.

Yes.

You can do anything you like, but if you file bankruptcy before your short sale is completed, I can pretty much guarantee that the short sale will fall through.

See a bankruptcy attorney with all of the details, it sounds as if you have sold the house, but the bank will still have a lien on it, and there is the potential of a deficiency judgment against you on the note.

The filing of a bankruptcy is likely to derail the short sale, because the bankruptcy trustee would have to approve the deal and could delay it while reviewing the terms. It is better to close the sale and then file bankruptcy on any possible deficiencies.

If you file a bankruptcy, it will halt the short sale negotiations, until the 341 hearing is completed and the Trustee abandons interest in the real property.