First off, I am not a CPA—or even a tax attorney. However, a large number of potential clients who visit me to inquire about the advantages of bankruptcy relative to those of a short sale (or outright foreclosure walk-away) when distressed real estate is their primary concern have not realized that there may be tax-related disadvantages to the short sale of a property or walking away via foreclosure.
Indeed, there can be.
As of December, 2011, the amount of acreage owned is no longer a factor in determining the length of the post-foreclosure sheriff’s sale redemption period in Michigan. Prior to December, 2011, foreclosure of land more than 3 acres required a “redemption period” of 12 months as opposed to the 6 months required for non-abandoned property of less than 3 acres.
While Bankruptcy is one of the most cost-effective and efficient legal means of walking away from an underwater or foreclosed home available, it is also, under the right circumstances, a better means of saving a home in danger of foreclosure than other non-bankruptcy strategies, such as mortgage modification.
Guest Post by Atlanta Bankruptcy Attorney Peter Bricks.
I am often surprised how many chapter 7 bankruptcy debtors who want to file bankruptcy just before a foreclosure sale to stop the sale, ask the following question: Can I short sale my house after I file bankruptcy?
Although it can be done, it rarely makes sense. The reason is because a home mortgage short sale after filing chapter 7 bankruptcy rarely makes sense.
Posted in Foreclosure, Property, Real Estate, Short Sales
Tagged Bankruptcy, Chapter 7, mortgage, property, Reaffirmation Agreements, real estate, short sale
The practice of a Chapter 7 bankruptcy Trustee seizing and selling real estate after it is surrendered in bankruptcy and then sold at foreclosure sheriff’s sale is a phenomenon may be primarily local to the Detroit, Michigan bankruptcy courts. However, it has become more and more common for a Chapter 7 bankruptcy Trustee, in this area, after a case has been discharged, to re-sell real estate that has been surrendered in the bankruptcy in order to gain proceeds from the sale that may be distributed to a bankruptcy debtor’s creditors—and, of course, net a percentage “fee” for the Trustee.
How is this possible?
Posted in Chapter 7, Foreclosure, Home Mortgages and Bankruptcy, Michigan, Property, Real Estate, Tax debt, Uncategorized
Tagged Chapter 7, homestead, Michigan, real estate, trustee
