Short sale after Chapter 7 Bankruptcy

Anonymous · ‎02-19-2011

I am hoping someone has some experience with this. I have had my mortgage discharged in a chap 7 BK 1 year ago. I tried to keep the house payments going but that is going to need to stop. I am working with the bank on listing my home via Short Sale. The question nobody can answer is what will be the affect of my credit after short sale? As I see it, the tradelines are discharged meaning no more reporting. As far as I understand, a short sale is most likely a "settled" mark on a tradeline and not a public record. I don't see how a short sale shows up after BK since the tradeline is removed. Can someone either confirm or disagree with me? Any explanations would be greatly appreciated as well.

Thanks in advance!

IOBA · ‎02-19-2011

I don't have any experience with this, but someone else should be coming along and posting.

My understanding is the the mortgage will still report on the CR.

If you short sale it, then it's basically considered (for FICO scoring) as a foreclosure. The notations will vary - depending on your bank. It could say short saled, settled for less than the full amount, etc.

Now, for you, it is important that if it does short sell, that YOUR paperworks says you do not owe the remaining balance - that the bank is going to forgive it. You may or may not be liable for taxes on the difference.

carolina98 · ‎02-19-2011

If possible, call your BK attorney. My understanding is that if you did not reaffirm you can walk away from your house and there's no extra damage to your credit.

If you enter into a short sale agreement and it doesn't sale, then it can go to foreclosue, which could affect your credit.

You might can just walk away. That's what my attorney tells me. He thinks I'm an idiot for considering eaffirming my house. He says I don't know what the future holds and that I can stay in the house and pay the mortgage and even sell it if I want, and also walk away from the house with no extra effect on my credit if the things turns bad.

Anonymous · ‎02-20-2011

Yes you are right, my attorney also convinced me to not reaffirm and I am glad he did. These attorneys are so busy right now, I got in touch with him and he said walk away. I understand legally that is a viable option as there is no deficiency judgment available to the bank. The source of my questions comes from the fact that my FICO is back up to 680 as pulled by my mortgage broker and I am 10 months away from the 2 years out of BK for VA. Due to personal issues we have to move closer to my wifes parents. I have not missed a mortgage payment which is required by VA if you want to buy within 2 years after a short sale so I need to short sale and keep FICO greater than 620. In any case, we need to move, just hoping it will work out favorably. If not, we rent for a longer time than expected.

I do appreciate your time in answering my question.

Anonymous · ‎02-20-2011

Thank you IOBA for your reply. I apprecaite your perspective and luckily I am covered. The BK removes the ability for a future judement on a discharged tradeline. I think your question regarding how my FICO is affected even if the tradeline is already legally discharged (hasn't reported on my credit for about a year now) is where my focus should be directed.

Thank you again