Legal Question in Real Estate Law in California
Hi - I am beginning the process of short selling my home in the desert. My question: if I sell my assets (I have around $85,000) to pay for other outstanding debts (besides the mortgage) totaling around $85,000 (to credit cards and individuals), will the bank look negatively on my decision to pay off those debts rather than the mortgage and not approve the short sale? Since the bank would take the $85K against the mortgage, wouldn't it be smart to pay off those other debts rather than default with the cc companies?
2 Answers from Attorneys
If you have assets of $85K, non-mortgage debts of $85K, and a mortgage that is more than the underlying property is worth, I can't see any reason you would not be talking to a bankruptcy attorney. Many of your assets may be exempt in bankruptcy, allowing you keep some of your assets while eliminating all of the debt. And if you are going to short sell the property, better to let the bank take it in a foreclosure under the bankruptcy, so there is no chance of any deficiency.
I agree with Mr. McCormick. Getting rid of your assets, before you have an approved short sale may be a bad idea. I would sit down and talk with an attorney that specializes in debt relief and banktruptcy.
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