San Diego Real Estate and Bankruptcy Attorney discusses the all to common problem of people finding themselves hounded for a debt the debt that often remains after a short sale.
A few day ago I wrote about a client that came in to have her short sale paper work reviewed. She wanted to make sure that she would not still owe any money after the short sale. Our real estate and bankruptcy attorney reviewing the paperwork found that the short sale did nothing to protect her after the sale for the remaining amount of the loans.
While I was writing about that client, we had another new client call the office. This client has gone through the short sale process already with a San Diego real estate broker. Of course, the broker has assured her that he had negotiated a deal with both the first and second lenders and she would owe nothing after the short sale – this promise seems fairly common.
Despite what the Broker had told her, the lender on the second was hounding her for what remained on her loan. She did not know what to do. She thought that everything to do with that property was in her past. Unfortunately it was not. She is still on the hook for about $60,000.00. Of course, she cannot afford this.
Luckily the lender has not filed a lawsuit yet but for $60,000.00 I think they eventually will. Or at least the will sell the note to collection agency that will file suit and hound her (I have seen collection firms file suits for amounts as little as $8,000.00).
If they do file, what can she do? She has no real defense. The paperwork on the short sale did not discharge he obligation on the second note. The lender will likely win in the lawsuit and she will likely spend attorneys fees to someone in a feeble attempt to defend the suit.
Once the lender has won the lawsuit, they will hit her bank account and garnish her wages. She is gonna find herself right back where she was when she made the decision to short sale – well not exactly – she will be in a much worse position with money flowing away from her that she cannot control and no longer in the house.
Bankruptcy is likely going to be her only real option.
After these 2 calls about short sales in a matter of a few hours in which the end result was not good for either caller, the San Diego Real Estate and Bankruptcy Attorneys in our office got to talking about these issues. Mainly how many people are going to be facing the same thing? It seems to us that a lot of people are going to be in the same boat – thinking they had effectively erased the financial troubles they faced for various reasons related to their homes through a short sale only to learn that they are in an even worse position because of the short sale!
I hope we are wrong but I think a lot of people out there that did short sales without a lawyer looking through the paper work are in for a chilling surprise.
If you find yourself in this situation, feel free to give us a call to discuss your options.
If you are just starting the short sale process, I encourage you to call our San Diego Short Sale lawyers to help you navigate the process. We do not actually have anything to do with selling the property in a short sale, instead we are there to make sure those selling the house and negotiating on your behalf have your best interests in mind. Think about this – do you want to rely on the person trying to short sell your house to make sure that you are being protected? Before you answer, remember that they are only going to get their commission if the sale closes – so is it really in their best interest to fully explain everything to you or is it in their best interest to get you to sign on the dotted line? That is why our San Diego Real Estate and Bankruptcy Lawyers do not get involved in the actual sale but instead review the documents like the agreement with the broker and the purchase agreement to make sure you are going to get what you really need from the short sale – the ability to walk away from all the debt you owe on the home.
The Attorneys at the Law Office of Harold D. Thompson are San Diego Real Estate and Bankruptcy Lawyers dedicated to helping with all of your real estate issues. Call us TODAY at 619.615.0767 or visit us at www.ThompsonLawSD.com to find our more about our firm. You can also find out some useful bankruptcy information at our San Diego Bankruptcy Lawyer Blog.
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