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Category: Bankruptcy Law
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Experience:  Bankruptcy professor.
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Good Morning, Here is the situation. I live and work in NY.

Resolved Question:

Good Morning, Here is the situation. I live and work in NY. I have a small studio in Forest Hills with a mortgage of 68 000$ and market price about $100 000. I make about 75 000$ per year. In 2007 i purchased 3 properties in Atlantic City NJ .. Currently all of them in foreclosure. I am in a process of negotiating short sales with the banks. The total amount i owe is about $1100000+ and the current combined market value of all 2 of them is about $400 000. I had about 250 000$ in unsecured debt .. which i settled and paid off in the last two years. I am extremely worried what will happen after i shot sale these properties. There will be possible deficiency judgments. Best case scenario it will be 1099-c for about $600 000. I spoke with a couple of accountants and they suggest to file for a bankruptcy. I am terrified from this idea, considering i paid off all my credit card debts. Could you please advise me of my options. What it will be the best way to proceed in my situation.

Thank you
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 3 years ago.
Hi JACustomer,
To short sell the Atlantic City properties, it is necessary to get the approval of the mortgagees (the lenders). In addition to this approval, you can require that the lenders waive their right to pursue deficiency judgments for the balances of the mortgages.
If this is not possible - if you are not able to short sell and/or if the lenders will not waive their rights to get deficiency judgments, Bankruptcy can protect you from those judgments and also from the obligation to pay income taxes on the 1099-C forgiven debt.
I don't think there is any other way for you to avoid these possible liabilities.

I think this is what you wanted to know. If not, please let me know.
Thank you.
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience: Bankruptcy professor.
cfortunato and 3 other Bankruptcy Law Specialists are ready to help you
Customer: replied 3 years ago.
Thank you so much for the quick reply. Can i declare the bankruptcy only if the banks file the deficiency judgment against me. Or it has to be done before the short sales are done? My real estate agent is negotiating all details with the banks. Thank you
Expert:  cfortunato replied 3 years ago.
Thank you for accepting my answer!
You can file a Bankruptcy either before or after a lender gets a deficiency judgment.
If you file before a deficiency judgment is gotten, the Bankrutpcy will prevent the lender from getting a judgment. If you file after a deficiency judgment is gotten, the Bankruptcy will discharge the judgment.

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