Short Sale Attorney Los Angeles
Financial hardship caused by mounting medical bills, divorce, death, job loss and other unexpected difficulties often leave homeowners unable to keep up with their monthly mortgage obligations, thereby putting them at risk for foreclosure. For homeowners in Los Angeles, foreclosure is a frightening prospect, one that could affect their credit history and financial credibility for years to come. Fortunately, debt does not necessarily have to end in foreclosure. One way for Los Angeles homeowners to avoid a foreclosure is to conduct a short sale. A licensed short sale attorney will have the experience and knowledge necessary to conduct short sale negotiations on your behalf. If you are struggling under the burden of a home mortgage and you want to avoid a foreclosure, contact ibankruptcyattorneys.com today to schedule a free consultation with our Los Angeles short sale attorneys. Our attorneys are experienced in all matters related to foreclosure and short sales and we can evaluate the circumstances of your case and offer you valuable legal advice.
Reputable Los Angeles Short Sale Attorneys
The primary objective of a short sale is to save the homeowner from foreclosure and the negative effects of a foreclosure. If done correctly, a short sale is an excellent alternative to foreclosure that allows you to set aside your mortgage debt and move on without a foreclosure on your record and without the threat of a deficiency judgment. The key word here is “correctly.” Although a short sale may appear to be similar to a traditional property sale, it is actually a complicated real estate transaction requiring the expertise of a professional attorney with a track record of success negotiating short sales in Southern California. There are many moving parts in a short sale and there are a number of factors you should consider before moving forward with a short sale in Los Angeles. In order words, a short sale is not something you want to leave in the hands of a novice attorney with zero prior experience handling short sales and foreclosures in Los Angeles.
If you decide to pursue a short sale, the best way to protect yourself and ensure that your best interests are protected is to hire a seasoned Los Angeles short sale attorney. Our accomplished lawyers at ibankruptcyattorneys.com provide qualified legal counsel to homeowners in Los Angeles and throughout Southern California, and we can help you get the best outcome in your short sale. Every homeowner’s situation is different, which is why you should take the time to speak with a lawyer who can advise you on the best path forward for the position you are in.
What is a Short Sale?
When homeowners fall behind on their mortgage, they are sometimes able to sell their property before defaulting on the loan and use the proceeds from the sale to pay off their mortgage loan in full. Unfortunately, many financially strapped homeowners owe more on their property than it is currently worth, which means the property is “underwater” or they are “upside down” on their mortgage. In this case, a traditional sale would not allow them to pay off the debt. Under these circumstances, the best solution may be a short sale, in which the lender allows the homeowner to sell the property at a loss rather than pursuing a foreclosure. A short sale is any real estate sale where the debt owed on the mortgage exceeds the fair market value of the property and the proceeds from the sale of the property fall short of what the borrower owes.
Benefits of a Short Sale
A mortgage loan is a secured loan. That means when you obtained your mortgage loan, you pledged the purchased property as collateral for the loan. That also means the lender has the right to seize the property if you default on the loan or fail to pay it back according to the initial agreement. In that case, you may be wondering why a lender would ever agree to a short sale and allow a borrower to sell their property for less than what they owe on their mortgage loan rather than simply foreclosing on the property. After all, a short sale leaves the lender short of the original loan amount. That said, a short sale actually benefits both parties and can leave both in a better position than a foreclosure would. By agreeing to a short sale, lenders can avoid the expense and delay associated with the foreclosure process while obtaining at least partial payment on the mortgage loan, as opposed to taking a total loss. For borrowers, both a foreclosure and a short sale relieves them of their obligation to pay the mortgage debt. However, with a short sale, borrowers have more control over the sale, which may be preferrable for some people. Borrowers who opt for a short sale can also avoid the negative stigma associated with foreclosure and may be able to qualify for another mortgage loan sooner than they would after a foreclosure.
Deficiency Protection Following a Short Sale
Any time a borrower defaults on a mortgage loan and the property in question sells for less than the amount due on the loan, there is always a risk that the lender will ask the court to issue a deficiency judgment and hold the borrower liable for the deficiency. A deficiency is the difference between the amount the borrower owed on the loan and the funds the lender obtained from the short sale. Fortunately, California law offers robust protections for borrowers in short sale, nonjudicial foreclosure and deed in lieu of foreclosure situations. Under state law, lenders who agree to a short sale are prohibited from pursuing borrowers for future deficiency liabilities that result from the short sale. That means the lender cannot come after you for the remainder of the outstanding debt. By forbidding deficiency judgments in short sale transactions, the state of California has made it less risky for homeowners to pursue a short sale.
What to Expect from the Short Sale Process
Once notorious for their challenges, short sales are becoming a more common solution for homeowners who are upside down on their mortgage and want to have the debt they owe to the bank forgiven. Not all homeowners will qualify for a short sale, however. In most cases, a lender will require a borrower to provide proof of economic hardship or inability to repay the mortgage loan before agreeing to proceed with a short sale. Once the short sale is approved by the lender, the property will be listed for sale. When you get an offer from a potential buyer, the offer and paperwork must be submitted to the lender so the deal can be negotiated. If the initial offer is too low, the lender will counter with a higher offer, usually one that is close to the appraised value of the property. Once the lender approves an offer, the short sale will proceed and the transaction will be completed. If you are considering a short sale, you are probably wondering how long it will take. Even if the lender has experience reviewing short sale applications, the process of conducting a short sale can be long and arduous, which is why we recommend enlisting the help of a reputable short sale attorney who can handle the details for you, including arranging an appraisal, evaluating comparable homes and their prices, and negotiating with lienholders. When all is said and done, the short sale process can take between three and six months from beginning to end.
Short Sales with Multiple Mortgages
When a lender agrees to a short sale and the short sale is completed, the proceeds from the sale will be put towards the debt owed on the mortgage loan. If there are multiple mortgages, all of the invested creditors being asked to accept less than the full amount they are owed must approve the sale.
How Bankruptcy Can Help
Homeowners who have fallen behind on their mortgage will often go to great lengths to avoid a foreclosure, and in some cases, this means filing for bankruptcy. If you have significant debt and few assets, you may be eligible to pursue bankruptcy relief under Chapter 7 of the Bankruptcy Code, which allows you to liquidate your nonexempt assets and discharge your unsecured debts, like credit card debt and medical debt, thereby freeing up cash that you can put towards paying your mortgage. If you have a steady income and can afford to pay all or a portion of your debts over time, you may be able to propose a debt repayment plan under Chapter 13 of the Bankruptcy Code. A Chapter 13 bankruptcy can help you protect your home from foreclosure and get caught up on past due mortgage payments while also making your current payments. Another potential benefit of filing a Chapter 13 bankruptcy is a process known as “lien stripping.” If you have a second or third mortgage on your home and all the equity in the property is secured under the first mortgage, you may be able to “strip” the junior liens (the second or third mortgages) from the property and make the debt unsecured and therefore dischargeable in a Chapter 13 bankruptcy.
Which Debt-Relief Solution is Right for Me?
If your mortgage debt is the only debt overwhelming you and you want to get rid of the property, a short sale could be more beneficial than filing for bankruptcy. However, if you have other significant debt on top of your mortgage debt, you may prefer bankruptcy or you may choose to sell your property in a short sale and proceed with a Chapter 7 or Chapter 13 bankruptcy at the same time. If you are facing foreclosure, the automatic stay that goes into effect when you file a petition for bankruptcy can stay the foreclosure and allow you to complete the short sale while eliminating other unwanted debts. If you are wondering whether a short sale or bankruptcy is the right debt-relief solution for you, you should consult a qualified bankruptcy attorney as soon as possible.
Why You Should Hire an Attorney
As you can see, there are many debt-relief options out there, each of which comes with its own advantages and disadvantages. If you are struggling with crippling debt that prevents you from making your mortgage payments, foreclosure may seem imminent, but it isn’t the only answer. By acting quickly, you may be able to avoid a foreclosure and put yourself in a better financial position moving forward. Whatever your financial situation, a knowledgeable Los Angeles short sale attorney can help you get back on your feet and rid yourself of the debt that is overwhelming you. No one wants to feel like they are drowning in debt, but it isn’t always easy knowing how to eliminate your debt and where to turn for help. When you retain the services of our short sale attorneys at ibankruptcyattorneys.com, we will walk you through every step of the short sale process and ensure that you understand all of your debt-relief options so you can make the decision that makes the most sense for you.
Contact Our Los Angeles Short Sale Attorneys
If your debt becomes unmanageable and you are no longer able to keep up with your mortgage payments, you may be wondering what options you have to avoid a foreclosure. In many cases, a short sale is a better alternative to a foreclosure, but there is no one-size-fits-all solution to the difficulties created by debt, which is why it is always a good idea to speak to an experienced attorney about the pros and cons of a short sale compared to your other options. Contact our short sale attorneys in Los Angeles today to discuss your financial situation and decide what solution suits you best. Our legal team at ibankruptcyattorneys.com is committed to helping homeowners in Los Angeles and throughout Southern California get out from under crippling debt, and we can help you decide whether a short sale, a foreclosure or bankruptcy is the best course of action based on your immediate needs and your long-term financial goals.