Legal Question in Real Estate Law in California

Re: Selling vs. Bankruptcy

If your property is causing you to go into bankruptcy and you don't have major credit card debts and other types of personal debt, you may be able to do what is called as a "short sale". Call me at 213.388.7070 for more details and to see whether you can qualify for a short sale which saves you from a potential bankruptcy.

Re: Selling vs. Bankruptcy

You should probably consult a bankruptcy lawyer about this, since it looks as though you'll be needing one either way.

One of the many reasons you need banruptcy counsel is that disposing of the house and use of any of the proceeds to pay off creditors could result in what are called "preferences" and the sale or the use of the money could be challenged by the bankruptcy trustee.

When you say "at a loss," that isn't totally descriptive. Do you mean "for less than you paid" (the usual meaning of selling at a loss) or "for less than I currently owe on it?" This has some bearing on the right decision.

If you don't sell first, you would add the house to your list of assets, while the mortgage and other liens would be scheduled as liabilities.

Another unknown here is whether your proposed sell-first deal is a good one, or a fire sale. A sale after obtaining bankruptcy-court protection could, conceivably, involve less time pressure and allow for more aggressive pricing, but here again, there are timing issues - will the market in your neighborhood be better in spring 2007 when it would probably be listed?

Finally, filing the bankruptcy first and then having the house sold while under bankruptcy court protection would probably allow you to stay in the house longer.

Get a bankruptcy attorney - now that the BK laws have been tightened up, most of them need new clients and will aggressively court your business.