I was in foreclosure and filed for chapter 13 bankruptcy to hold off the auction date, but we realize we will not be able to make regular mortgage payments and pay the bankruptcy trustee. Is there anything else we can do, such as a deed in lieu of foreclosure or a short sale?
-- (Posted by Ann on the Chat Room)
(Editor’s note: In a “short sale” the property is sold for less than the amount then due to the mortgagee (lender). The lender then agrees to accept the discounted price and release its lien on the property. When a borrower offers a 'deed in lieu of foreclosure' she is conveying all of her interest in the property to the lender in return for forgiveness of most or all of her liability to the lender. Because of the legal, credit, and tax implications associated with these options, it is an excellent idea to contact an attorney for help.)
(The following response was posted by attorney Lisa Sigman of Wakefield.) In order to qualify for a short sale, you have to have a legitimate offer from a buyer. In any case, you should not hesitate to act on this matter, as you may be running out of time to exercise other options if you are already behind on multiple payments. We negotiate short sales and deeds in lieu of foreclosure for clients on, sadly, a regular basis.