Short Sale

A short sale refers to when you sell your house for a price that is not sufficient to pay off all of the loans against your property. When you sell your home, you have to pay off the existing loans against your house so that your lender will release the loans against your property.  The terms "short" sale refers to the selling price, or proceeds of sale, coming short of paying off the existing liens.  In most cases, you can do a short sale and proceed with a Chapter 7 or Chapter 13 bankruptcy at the same time.  In many cases, you will need to file a bankruptcy to stop foreclosure of your property so that you can wrap up a short sale, and eliminate credit card debt and other unwanted debts. 

Short Sale and Bankruptcy in San Diego

If you need to file bankruptcy, it usually will not disrupt a short sale.  If you want to close the short sale while you are still in bankruptcy, you can.  You will need the bankruptcy court's approval, and the bankruptcy court usually will agree to a short sale because the bankruptcy court will not have any interest in your property.  If you are doing a short sale, it necessarily means there is no equity in your property. Hence, your property will not be of any value to the bankruptcy court or bankruptcy trustee.

Short Sale if Filing Bankruptcy?

So why would you ever want to short sale your home if you are filing bankruptcy?  Well, surprisingly to many people, there is a very important reason you would want to consider doing a short sale when you file a bankruptcy in San Diego.  A short sale will help avoid liability for HOA fees after bankruptcy. Under California law, after you file bankruptcy in San Diego, as long as you remain on title to your property you are liable for HOA dues. After bankruptcy, it is very common for HOAs to simply sit back, let HOA fees accrue until your lender forecloses on your house, and then file an HOA lawsuit against you to collect the unpaid HOA fees.  This is actually quite common in San Diego.  If you own a property governed by an HOA, you'll want to do a short sale after bankruptcy to stop accruing liability for HOA dues.

Broker Commission and Moving Costs

Another reason you may want to do a short sale after bankruptcy in San Diego is so that you and your broker can receive some sort of compensation (money) from the short sale.   Many lenders will pay for your moving cost in addition to the broker commission that is customary in a short sale in San Diego.

Short Sale If You Don't Qualify for Bankruptcy In San Diego 

What if bankruptcy just is not an option.  In that case, a short sale will look better on your credit report than a foreclosure.  If you do not qualify for bankruptcy, then your lawyer may advise you to do short sale of your house to prevent a foreclosure from taking place.  That way, your credit will show a short sale instead of a foreclosure.  Both are bad marks on your credit, but most bankruptcy lawyers would agree that a short sale does not look quite as bad as a foreclosure.

Short Sale Consultation

To short sale your home, either before, during, or after bankruptcy, you will need the guidance of an experienced San Diego bankruptcy attorney.  Short sales are a unique type of sale that requires specialized knowledge and can only be properly handled with the guidance of a San Diego bankruptcy lawyer.  If you are considering doing a short sale of your home, contact Bankruptcy Legal Center today, and talk to an attorney about your situation.  Call us now at 1 (800) 44-DEBTS (800-443-3287).