Can my credit be damaged from bankruptcy and a short sale? 14 Answers as of March 27, 2014

We filed bankruptcy about 9 years ago and our second mortgage was not reaffirmed. We owe $42,000 and have been offered a settlement of $6,000. But the letter from the mortgage company says it will be reported as a short sale if we pay the $6,000 instead of the balance. Should our credit be hit twice (bankruptcy and short sale) for the same property?

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Law Offices of Linda Rose Fessler | Linda Fessler
Yes and you will also pay taxes in the $34,000.
Answer Applies to: California
Replied: 3/27/2014
Bird & VanDyke, Inc.
Bird & VanDyke, Inc. | David VanDyke
No! The second mortgage holder cannot continue to report a discharged debt.
Answer Applies to: California
Replied: 3/26/2014
Indianapolis Bankruptcy Law Office of Eric C. Lewis
Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
If you didn't reaffirm the debt they shouldn't be reporting it at all and certainly should not be asking payment of you.
Answer Applies to: Indiana
Replied: 3/26/2014
Goldsmith & Guymon
Goldsmith & Guymon | Marjorie Guymon
The second mortgage is a secured creditor on title to your home. In order to report it paid, there must be a notation on your credit report.
Answer Applies to: Nevada
Replied: 3/26/2014
EDWARD P RUSSELL | EDWARD P RUSSELL
A ch. 7 Bankruptcy stays on your rating for 10 yrs. I would expect that your credit score should improve after a bankruptcy since you pay your bills on time as the past debts are gone. Since you did not sign a reaffirmation agreement in the bankruptcy that 2nd mortgage has been discharged in the bankruptcy. There is no point in paying $6,000 to settle a debt that has been already discharged.
Answer Applies to: Minnesota
Replied: 3/25/2014
    Law Office of J. Thomas Black, P.C.
    Law Office of J. Thomas Black, P.C. | J. Thomas Black
    The bankruptcy and the short sale are different things. More importantly, the Fair Credit Reporting Act says that creditors must report accurate information, and it is accurate for them to report how the property was disposed of, either by paying it in full, foreclosure or short sale. It sounds like a great result to me, your credit can recover.
    Answer Applies to: Texas
    Replied: 3/25/2014
    GARCIA & GONZALES, P.C.
    GARCIA & GONZALES, P.C. | Richard N. Gonzales
    Adverse credit remarks can only be reported for 7 years (3 exceptions - a bankruptcy, foreclosure, or tax lien can be reported a bit longer). If the debt was not reaffirmed, why would you pay anything? To what advantage? Also, the statute of limitations here in Colorado is six years for the collection of a debt. Thereafter, the debt is not owed. I see no advantage for you paying this reduced amount.
    Answer Applies to: Colorado
    Replied: 3/25/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    Although the short sale info won't hit your consumer credit report or affect your FICO score, I would expect this short sale to be known as a risk factor when you apply for new mortgage financing.
    Answer Applies to: Nevada
    Replied: 3/25/2014
    Thomas Vogele & Associates, APC | Thomas A. Vogele
    Filing a bankruptcy petition damages your credit and will remain on your credit report for ten years. A short-sale similarly damages your credit but the reporting agencies only keep such records for seven years. If you're filing bankruptcy anyway, a short-sale will not damage your credit standing any more. Good luck!
    Answer Applies to: California
    Replied: 3/25/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    Yes, that is two hits on the credit report. It does not matter that you did not reaffirm the second. The property is security for the loan and that survived the bankruptcy.
    Answer Applies to: California
    Replied: 3/25/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    It is probably a standard letter but you can ask them to change the letter as it would be a bankruptcy discharge violation for which you can sue them if they report it on your credit.
    Answer Applies to: New York
    Replied: 3/25/2014
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    The short answer is, yes. The bankruptcy case discharged your debts. A short sale is an agreement to get the mortgage lender to release their lien against the property in exchange for an agreed-upon settlement amount. The lien is separate from the debt, but the only way you can ever sell a property and deliver clear title to a buyer is to get the lien released.
    Answer Applies to: Colorado
    Replied: 3/25/2014
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    Perhaps, seek counsel with the details.
    Answer Applies to: Michigan
    Replied: 3/25/2014
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    You will have the short sale show up on your credit report, but if you owe $42,000 on your house and can get it for $6,000, assuming that you want to keep the house, take and work on rebuilding your credit other ways. You can put a short explanation in your credit report that this is what is going on. Just go on the internet or call the credit reporting bureaus ( after the short sale takes place) and they walk you write through it.
    Answer Applies to: Michigan
    Replied: 3/25/2014
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