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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2900
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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My ex wife and I have a home together which is on the market

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My ex wife and I have a home together which is on the market (short sale). Our marriage settlement agreement states she would stay in the house until it sells. We have a buyer, our first mortgage company agreed to the price. The second mortgage company is within $5000 of agreeing. The buyers were scheduled to close no later than March 19th, 2010. The are getting a VA loan which has closing deadlines. My ex wife moves out of the home, so incase the closing comes early the house is vacant. My ex also filed bankruptcy over a month ago. Now the home is locked up due to the bankruptcy, and she will not sign a release. I have tried to tell her a short sale is not as bad as bankruptcy on her credit. She and her bankruptcy attorney have a different opinion. She is protected by her bankruptcy and I am not. I refuse to throw in the towel, and have the home foreclosed, or go bankrupt. What can I do?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 7 years ago.
Hi and thanks for your question.
The bankruptcy removes her liability to pay on the mortgage. If you were cosigned, you are still obligated to make the payments,regardless of what she is doing. If there is no equity (and since you are talking short sale, that's doubtful) the court will not take any interest in the home, and she'll be discharged. Her name stays on the deed/title, but her name comes off the mortgage. It is still your home until you sell or it forecloses. The lender probably took steps to protect the home from damage since she was surrendering her interest thru her bankruptcy case. I've seen lenders more willing to finish the short sale, since their debt is discharged in the case. (at least for her). Keep moving on the sales, keep the pressure on the lenders to complete the transactions. The amount forgiven by the lender to allow the short sale is taxable to you, so talk to your accountant about the ramifications. Thanks for your question, and good luck.
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