Profile picture for belike23

I lost my job and I am filing Chapter 7 bankruptcy.I owe more

on my home than it is worth.  If I wait for it to go to Sheriff Sale and have cash in hand to bid and buy, is that possible.  Will the bank go for what the home is worth or what is owed on the mortgage?  Or would it be better to speak to the mortgage company before hand and try to settle and pay them cash?  Thanks
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January 29 2011 - Woodbury
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Answers (10)

You have to try and negotiate with the bank before the sheriff sale. 

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May 22 2012
Profile picture for TomBJF
Before you talk to anyone, talk to an attorney with experience in bankruptcy and foreclosures and do it fast. The sooner you start working on the issue the easier things are.

This isn't something you really want to decide based on what people tell you that aren't familiar with the details of your situation.

Don't talk to your lender directly. Avoid those "stop foreclosure" companies. Go with a real attorney that practices in this area.

The foreclosure process in NJ is pretty long and you can get some lenders to work things out during that time period.
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May 19 2012
Profile picture for belike23
Well, I would be getting the cash from another source, let's say "mom".  So the money is not preventing me from filing bankruptcy, but is available in the future.  The money is not possessed by myself yet.  But I would still like to remain in my house I possess now , but the mortgage is $70,000 more than the home is worth, so I shoould just move.  No emothional value to me and this house I'm in now.  Just don't have the energy and resources to go through a move if I don't have to.  I would gladly give fair market value for the home I'm in now after the bankruptcy, but how do I go about doing this?
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January 30 2011
Chapter 7 is a liquidation of assets BK.... thus you should not have any money to buy the home at the sheriff's sale... which btw the bank will want the market value of the property...

Consult with your BK attorney... look for a NACBA attorney (National Association of Consumer Bankrutcy Attorneys)  their members are amazing.

At the end it seems to me like you are trying way to hard to hold on to a home for emotional reasons...  it reminds me of a client of mine that did a short sale on a condo she was paying $4,000 a month in mortgage and turned around and moved to the condo across the hall for $1,700 in rent... ho hoa dues! LOL!

So... your house is a replaceable item,,. your health and sanity are not... think about the great benefit of a chapter 7 BK allowing you to start fresh...

Best of luck!

Ron Escobar, MBA
Broker
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January 30 2011
The bank will usually send a trustee to the Sherrif auction to bid the loan amount to keep you and anyone else from buying it back for less than what is owed. As the others have said a lender approved short sale is probably the best option. Also Mike wrote about the deficiency judgment that needs to be considered. And also something to be considered is that any amount forgiven can be taxed as income. Bottom line: Call your lender and a CDPE certified Realtor that specializes in Short Sales.  
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January 30 2011
Profile picture for wetdawgs

It sounds like you have four options:

a.  Short sale - the rules are this must be an arm's length transaction so you are not eligible to buy your own house.

b.  Foreclosure - you may be able to bid at the sheriff sale.  

c. Try to get the mortgage refinanced under the making homes affordable program.

d.  Pay as you agreed to originally. 

Phoning the bank and saying "I owe you $200 k but I'll give you $100 k cash if you drop the mortgage" isn't going to fly.   I'm a bit puzzled how you ended up with enough cash to have this option when you've just been through bankruptcy.

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January 30 2011
Hello, Belike23.  No question you should advise the mortgage company of your change in employment as well as your financial situation.  Your next step should be to call a Realtor who is CDPE certified.  They've taken the necessary educational classes to best represent you in your situation.  Applying for a short sale (where the bank agrees to accept less than is owed on the home) is your best avenue. 
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January 30 2011
Avoid Foreclosures will be the most important. Do you talk to the lender so the bank knew what is happening?
Do you talk to a local realtor if you can do the short sale?
I have represented a buyer who purchase a short sale home and the owner filed the bankruptcy and we closed the transcation on Dec 28, 2010. Good luck.

Grace Keng
Re/MAX RES
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January 29 2011
New Jersey law allows for deficiency judgments. What that means is the lender can sue for the difference between the loan amount and the sale amount. Obviously if you had the ability to repurchase your home (presumably at a discount) your lender would want their money.

Presuming you have hired an attorney for your bankruptcy proceedings, talk to an attorney about your options regarding preservation of your rights in regards to your home.

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January 29 2011
Hello,
I'd recommend talking to the mortgage company ASAP.
They should be ablel to help you find out more information about your loan.

Sincerely,
Jean Steichen, Realtor
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January 29 2011
 
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