QUESTION
Does she have other options than waiting for the bank to foreclose her house and file for bankruptcy before the house can be sold?
Asked on Aug 26th, 2012 on Bankruptcy - California
More details to this question:
We are trying to purchase a home from a friend but she owes $326,000 on her mortgage and has a home equity loan that she also owes $70,000. The house is appraised at $330,000 and we would like to purchase this house. She was told by the bank that she owes the equity loan on that and she cannot sell until she pays off the $70,000. She is planning to have the house foreclosed then file for bankruptcy and include the equity loan in the bankruptcy. She was informed by her attorney that the bank would let her know when they are going to foreclose. That we can try to buy from the bank before they list it with a realtor and that it would save the bank time and money. It will take a long time for her to file bankruptcy and foreclose. We would love to purchase this home as soon as possible.
8 ANSWERS
General Practice Attorney serving Crystal Lake, IL
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Bruning & Associates, P.C.
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You can see if it is possible to work out a short sale arrangement with the bank(s) so you can get the house before the foreclosure and bankruptcy processes are over. However, the scenario you detailed might be her best option if the bank(s) are unwilling to negotiate a short sale.
Answered on Sep 05th, 2012 at 12:30 PM
Bankruptcy Attorney serving Phoenix, AZ
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Law Office of D. L. Drain, P.A.
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There may be another option - a chapter 13 to strip the second mortgage. But, please understand that chapter 13 bankruptcy is a very complicated process. It is wise to talk to an experienced bankruptcy attorney before deciding to take this important step. Most Arizona bankruptcy attorneys offer a free consultation about the basics of bankruptcy.
Answered on Sep 04th, 2012 at 11:51 AM
Criminal Law Attorney serving Fremont, CA
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Steven J. Alpers, A Professional Corporation
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You need to get a realtor or broker and try to arrange a short sale.
Answered on Sep 03rd, 2012 at 12:01 PM
This seems like your friend's best option. She doesn't have to wait until the home is foreclosed to file her bankruptcy though - she can file it now, state in the petition that she wishes to surrender the property, and move out. Maybe doing this and letting the bank know that the have a seller for the house will speed up the foreclosure/sale process.
Answered on Aug 31st, 2012 at 12:02 AM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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It the facts are as presented, the bank should be interested in your proposal. You need counsel to move the deal.
Answered on Aug 31st, 2012 at 12:02 AM
Probate and Estate Planning Attorney serving Harrison, MI
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David T. McAndrew, Attorney at Law
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Why not file for bankruptcy now, NOT reaffirm the home or the underlying home equity loan, offer the bank a deed in lieu of foreclosure as part of the bankruptcy plan, and permit them to assume ownership of the property without the 12 months that it takes for foreclosure to come to fruition.
Answered on Aug 30th, 2012 at 11:14 PM
Criminal Defense Attorney serving Deltona, FL
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R. Jason de Groot, P.A.
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Consult with her attorney. She can file bankruptcy now and perhaps strip that home equity loan.
Answered on Aug 30th, 2012 at 11:11 PM
There is no fast way to purchase the property under the circumstances unless both loans are paid off. Your friend should attempt to sell the property short after filing bankruptcy if in fact she needs to file bankruptcy at all. In CA, a second mortgagee that agrees to a short sale waives their right to collect any deficiency against the borrower. Contrary to popular belief you can short sell out of bankruptcy.
Answered on Aug 30th, 2012 at 12:28 PM