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Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 31687
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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Chapter 7 Bankruptcy in Utah. Now that I have filed for Chapter

Customer Question

Chapter 7 Bankruptcy in Utah. Now that I have filed for Chapter 7 bankruptcy what happens to my house? I am upside down in my house and have vacated the property. Does my house still go into foreclosure? If so, can I do a short sale before the auction date, to prevent a bk and foreclosure and ruin my credit. My state appointed trustee said that by doing a short sale now, it will open up a can of worms. I need help by someone that understands the law that I can trust. I have filed listing paperwork with a Realtor to sell my house can I do this during the bk or do I need to wait until the discharge?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 7 years ago.

Yes, your house can still be foreclosed by the lender. The lender will have to get permission from the bankruptcy court to foreclose (they will file a petition to lift the automatic stay).


If you are already in bankruptcy, a foreclosure is not going to harm your credit that much.


Also, a short sale is not going to help you any in a Chapter 7. The debt is going to be discharged anyway, so there's no advantage to doing a short sale.

Customer: replied 7 years ago.

My Realtor keeps telling me that after the bankruptcy discharge I can short sale my property so that I don't have a bk and a foreclosure. He said that a lender will lend to me with a bankruptcy, and if I do a short sale I will be able to get an FHA loan within 18 to 24 months. I am now looking to the future.


I don't have the money to hire a lawyer but have hopes to make the right decision. Do you think that I should just claim a bk and foreclosure? without looking at a short sale???



Expert:  Roger replied 7 years ago.

There is no real advantage of doing a short sale - other than to keep a foreclosure from appearing on your credit. My experience is that your credit is going to be in bad shape for 7 years anyway because of the bankruptcy, so the foreclosure is not going to hurt that much.


However, your realtor should be given some deference if he/she has seen a bankrupt get a loan where there is no foreclosure. She certainly knows the pulse of your area better than I. What she's saying has not been my experience, but that doesn't mean it can't happen the way she says.