Bankruptcy INK

People love their houses there is just no question about it. All day long people call us and tell stories about how they are upside down (owe more than their house is worth) in their house and they just want to save it but they hear from their cousin (who by the way is a bus driver) that”after you file bankruptcy that you never have good credit again" (which could not be further from the truth). They will talk to me about two different plans. The first is that they want to purchase the property for less than what they owe the bank. Which is known as a "Short Sale" The second plan is that they are going to refinance the property into someone else's name and purchase it back in one year. In general neither of these plans work and here is why:

1. A bank will not accept less money for the house WHILE YOU ARE STILL THERE. While you think they are getting nothing you are wrong. The bank is getting your house for exactly what you owe the way the process works is that the bank will sell the house to themselves at a sheriff even if no one else bids. They will sell the house for exactly what you owe on it. Therefore, even though you think they got nothing they did. They got an asset for their balance sheet and the asset is of the same value as what you owed. The bank will sell the house after they have evicted you and had time to review the value of the property they will sell the house. This is the only time you would be able to offer them less (yes that is correct you could buy the house for less but not until they kick you out.) This may seem counterintuitive but the banks share holders are only looking at the balance sheet not the real world application and they refuse to believe your house is worth less until one of their workers says it is the case. The other part of the story is that for every rule there is an exception. If I was going to try to buy the house for less I would contact the bank's attorney's in WRITING. I would courtesy copy the bank and I would attach a valid appraisal that indicates what you believe to be the value of the property. I would also include proof that you have the ability to refinance the property.

2. Worse than this plan is the second plan of transferring the property into another parties name. When your house goes into foreclosure you get a lot of mail. Some of the mail is from Attorney's like me and some of the mail is from individuals who will tell you that they can help you save your property if you have enough equity (ownership) of your home. When you call they will tell you that they can come to your house and have you sign papers to transfer the property out of your name. They tell you that they will take over the payments and you can buy the house back in a year when your credit improves. Do not get involved in this scam. You no longer own your property. You have just transferred it to someone else. That is the first problem with this plan. The second problem is that your house went into foreclosure and that affected your credit. During that year you haven't done anything to fix your credit. If you had filed a chapter 13 bankruptcy than you would have a new payment history regarding your house but instead you gave up the house. The payments you are making are no different then rent payments and rental payment are not recorded on your credit report. Therefore, your credit score will remain low all this because you don't like the name bankruptcy. William Shakespeare one said "what in a name? That which we call a rose by any other name would smell as sweet". -From Romeo and Juliet (II, ii, 1-2). The name is Bankruptcy but if you don't like the name change it. I like the name "Savedme" instead