Okay. To clarify I have received information from two attorneys with 2 seperate answers.
We sold our house in a short sale to avoid a foreclosure. The sale has not gone through yet since we were waiting on the mortgage co to approve which they did the other day.
The Problem, our house received hail damage which is very minimal and doesn't really need to be repaired. We filed an insurance claim and received our check about 6 months ago. It is still sitting in our bank account due to the sale of our house. The buyers want us to have it fixed and that is why we were holding on to the money. I spoke to my attorney and he explained to me that if I pay them this money it will be considered as preferential treatment of my creditors and I should not pay them. Worst case would be that the buyers walk away and the house forecloses and it just gets cleared in our bankruptcy.
Is this true? The buyer for our house can not be paid for repairs because it would be preferential treatment? We have received so much conflicting information. Our realtor says if we don't use the money to fix the house the insurance co can say it is insurance fraud and sue us to get the money back. Well, technically we would just list them as a creditor and they couldn't do much.
We just want to sell the house in a short sale and move on to avoid the foreclosure. Our realtor has worked really hard and deserves to get her commission from the mortgage co. So if I am able to pay this money to get the house fixed I will. I am not trying to get out of that. I just don't want any trouble or it to conflict with our banko filing. To clarify the attorney said since we deposited the check it is considered our money and it is exempt and the trustee can't take it, but if I pay these people the money, they can be sued for it.
We live in TX and the house is in MN, filing in TX. Thanks.
