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If you reside in the property, it may be covered by the bankruptcy exemptions in Florida, which are very generous.
Since you mentioned short sale, it sounds like there is no equity there at all, so there isn't a worry.
The transaction must be disclosed on the bankruptcy paperwork.
you can do it, no problem, but the issue is WHEN you should.
if done before filing, the settlement offered by the lender, becomes taxable to you as income, which is not discharged in a bankruptcy case.
Talk to your financial advisor about the reprocussions of shortselling on your taxes.
It is often advisable to just discharge it in the bankruptcy, and walk away, letting them foreclose.
thanks for your question, good luck.
the property has lost value as everywhere else, I remodel and put to much money in it so will like to keep the property by short sale to friend or family with a chance to buy back in the future after filing for chapter (??) since I already lost another property by foreclosure last year you mean the balance will be taxable?
if you sell it for less than you owe, and the lender agrees, the amount they forgive is taxable to you. The lender must agree.
If you file bankruptcy, you can choose to reaffirm the debt and keep making payments as is, while discharging the unsecured debts.
If you sell it beforehand, you will incur all sorts of taxes, and there would be no guarantee that you would qualify for the loan to re-buy it after bankruptcy for at least a year or two
I don't see any positive to sell for less than is owed, taking the tax hit, then purchasing it after bankruptcy.
do you follow?
the same house has been short sale in my community for less than 250k I owe 480k and expend 145k in upgrades that is why I ask but did not know about the taxing on short sale
Yeah, it is tough.
It may be better to file the BK, then just work on the payments with the lender. if you do not reaffirm, you are not on the hook for the mortgage. You can always sell it later, or even short sell, but that you should discuss with the tax guy.
Hope everything works out, good luck to you
there was another property I lost in foreclosure last year it was an empty lot purchase for 495k and by the time was foreclose the balance was 365k and it was sold for 27k you meant the balance is taxable as income to me?
no, with a foreclosed property, the lender can pursue that balance from you, which would be discharged in the case, if they court ordered a deficiency balance collectible. Some do, some don't. If the lender would subsequently write off the balance, then it could be collectible.
once you file, anything that transpires afterward would not be taxable, since that deficiency balance is discharged.
talk to your local bankruptcy attorney so that they can get a start on the case.
if I file for bk and decide to keep one of 3 properties that has an equity will that equity be a write off in the bk?
when consulting with local lawyer she said my debts were more than a chapter 7? or 13? that it may take chapter 11 how that really works I'm very confuse
It would depend on if you can exempt that equity. There is a homestead exemption to use for residences, so you must live there to protect any equity in a chapter 7
So, if your debt is too high for ch13, the 11 is an option.
Those can get pricey, and it is a very specialized case.
Chapter 7 is a liquidation if you don't have much disposable income, and want to surrender any assets that are not protected.
Ch11 is usually for corporations
Filing fee is over $1000
attorneys fees can be in the thousands and tens of thousands.
The cases are very case specific, and this forum is not allowed to go into any specific analysis.
Talk to the lawyer again to review all your options.
and good luck to you
let me refresh, my head is spining with million questions
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