J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

Several years ago here in Houston, the bankruptcy judges did not seem to be receptive to approving short sales; they didn't understand the reason for them. Why not just let the "underwater" properties foreclose, if there wasn't any equity in them for the debtors?

Well, that's an understandable position, but lately the Bankruptcy Courts have come around and are granting motions to sell when the transaction involves a short sale. A short sale is where there is a sale of real estate in which the proceeds from selling the property will not be enough to cover the balance of debts secured by liens against the property, and the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt.

If you are in bankruptcy here in the Southern District of Texas, and you are "upside down" on your house, that is, you owe more than it is worth, it is possible to have a short sale of the property approved by the court. Once you have the deal arranged, and all the parties have agreed in writing, and you have a signed Earnest Money Contract, contact your bankruptcy attorney and have them file a Motion to Sell with the Bankruptcy Court.

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