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Dischargeability of Short Pay Promissory Notes
Talk about sensibility, the client we discussed the other day still believes
a deed in lieu of foreclosure is not really a foreclosure and her credit
report will reflect that she did not suffer a foreclosure. I am amazed that
clients in trouble, that are on the eve of foreclosure and have months of
non payment of mortgages and credit cards still ask me what a bankruptcy
will do to their credit! What credit!! They are being given a boat and
its raining and they do not have a rain coat and are concerned that may get
some water on them as they are being rowed to shore.
Then there are the people with 2nd's and 3rd's that discuss short sales, but
the junior lenders will not agree. What are they thinking?
Our clients are being given a global solution in bankruptcy and they are
looking at the thing piece meal.
Sorry for ranting, your analysis is quite correct in my humble opinion.
Law Offices of Louis J. Esbin
Sent: Thursday, May 29, 2008 8:10 PM
To: cdcbaa@yahoogroups.com
Subject: [cdcbaa] Re: Dischargeability of Short Pay Promissory Notes
And, so my analysis seems correct? Also, I agree, as well, let it go
to foreclosure, especially with the facts given, that the risk of
nondischargeability outweighs any benefits perceived from a short
pay-sale. People want to believe that a short pay-sale is better than
a foreclosure sale, where they believe (right or wrong) that at least
they did not lose the home, but rather were able to have it sold. It
is more psychology than economics or sensibility.
Lou
>
> I agree. Why fool around with the note or anything else. Please
keep in
> mind the possible tax issues of the foreclosure (however being in
bankruptcy
> is an indicia of insolvency).
>
> Hank
>
> -----Original Message-----
Behalf Of
> Erik Clark
> Sent: Thursday, May 29, 2008 6:36 PM
> To: cdcbaa@yahoogroups.com
> Subject: RE: [cdcbaa] Dischargeability of Short Pay Promissory Notes
>
> Solution - let the property go through foreclosure - file the BK
>
> Erik Clark
>
>
>
>
>
>
>
>
>
>
>
>
>
> Facts: Client is negotiating with their lender to permit the short
> sale/pay of their principal residence. The loan is a refinanced loan
> obligation that included some cash out to the client in the refinance,
> including payment of prior purchase money and credit cards. Lender
> wants client to sign a promissory note for $50,000 with terms over 5
> years.
>
> Issue: If client signs note, defaults and files bankruptcy that
> includes the short pay note, would the lender have an argument that
> the note was obtained under false pretenses, because client never paid
> and never had an intention to pay (523(a)(2)(A))?
>
> Solution Rejected: I had note rewritten to include a warranty by the
> lender that the client was not making any representation regarding
> their financial condition or ability to pay and lender was not relying
> upon client's ability to pay in making note, but was making note
> merely as accommodation.
>
> Further Issue: Realtor assisting in negotiating short sale-pay does
> not want to sign off on deal if client can name Realtor in action in
> having deal close that only benefited Realtor in payment of
> commissions, while client received nothing but nondischargeable debt.
>
> Assistance and input on this important issue is appreciated.
>
> Lou Esbin
>
>
>
>
>
> ------------------------------------
>
> Yahoo! Groups Links
>
Yahoo! Groups Links
The post was migrated from Yahoo.
And, so my analysis seems correct? Also, I agree, as well, let it go
to foreclosure, especially with the facts given, that the risk of
nondischargeability outweighs any benefits perceived from a short
pay-sale. People want to believe that a short pay-sale is better than
a foreclosure sale, where they believe (right or wrong) that at least
they did not lose the home, but rather were able to have it sold. It
is more psychology than economics or sensibility.
Lou
>
> I agree. Why fool around with the note or anything else. Please
keep in
> mind the possible tax issues of the foreclosure (however being in
bankruptcy
> is an indicia of insolvency).
>
> Hank
>
> -----Original Message-----
Behalf Of
> Erik Clark
> Sent: Thursday, May 29, 2008 6:36 PM
> To: cdcbaa@yahoogroups.com
> Subject: RE: [cdcbaa] Dischargeability of Short Pay Promissory Notes
>
> Solution - let the property go through foreclosure - file the BK
>
> Erik Clark
>
>
>
>
>
>
>
>
>
>
>
>
>
> Facts: Client is negotiating with their lender to permit the short
> sale/pay of their principal residence. The loan is a refinanced loan
> obligation that included some cash out to the client in the refinance,
> including payment of prior purchase money and credit cards. Lender
> wants client to sign a promissory note for $50,000 with terms over 5
> years.
>
> Issue: If client signs note, defaults and files bankruptcy that
> includes the short pay note, would the lender have an argument that
> the note was obtained under false pretenses, because client never paid
> and never had an intention to pay (523(a)(2)(A))?
>
> Solution Rejected: I had note rewritten to include a warranty by the
> lender that the client was not making any representation regarding
> their financial condition or ability to pay and lender was not relying
> upon client's ability to pay in making note, but was making note
> merely as accommodation.
>
> Further Issue: Realtor assisting in negotiating short sale-pay does
> not want to sign off on deal if client can name Realtor in action in
> having deal close that only benefited Realtor in payment of
> commissions, while client received nothing but nondischargeable debt.
>
> Assistance and input on this important issue is appreciated.
>
> Lou Esbin
>
>
>
>
>
> ------------------------------------
>
> Yahoo! Groups Links
>
The post was migrated from Yahoo.
I agree. Why fool around with the note or anything else. Please keep in
mind the possible tax issues of the foreclosure (however being in bankruptcy
is an indicia of insolvency).
Hank
Erik Clark
Sent: Thursday, May 29, 2008 6:36 PM
To: cdcbaa@yahoogroups.com
Subject: RE: [cdcbaa] Dischargeability of Short Pay Promissory Notes
Solution - let the property go through foreclosure - file the BK
Erik Clark
Facts: Client is negotiating with their lender to permit the short
sale/pay of their principal residence. The loan is a refinanced loan
obligation that included some cash out to the client in the refinance,
including payment of prior purchase money and credit cards. Lender
wants client to sign a promissory note for $50,000 with terms over 5
years.
Issue: If client signs note, defaults and files bankruptcy that
includes the short pay note, would the lender have an argument that
the note was obtained under false pretenses, because client never paid
and never had an intention to pay (523(a)(2)(A))?
Solution Rejected: I had note rewritten to include a warranty by the
lender that the client was not making any representation regarding
their financial condition or ability to pay and lender was not relying
upon client's ability to pay in making note, but was making note
merely as accommodation.
Further Issue: Realtor assisting in negotiating short sale-pay does
not want to sign off on deal if client can name Realtor in action in
having deal close that only benefited Realtor in payment of
commissions, while client received nothing but nondischargeable debt.
Assistance and input on this important issue is appreciated.
Lou Esbin
Yahoo! Groups Links
The post was migrated from Yahoo.
Solution - let the property go through foreclosure - file the BK
Erik Clark
Facts: Client is negotiating with their lender to permit the short
sale/pay of their principal residence. The loan is a refinanced loan
obligation that included some cash out to the client in the refinance,
including payment of prior purchase money and credit cards. Lender
wants client to sign a promissory note for $50,000 with terms over 5
years.
Issue: If client signs note, defaults and files bankruptcy that
includes the short pay note, would the lender have an argument that
the note was obtained under false pretenses, because client never paid
and never had an intention to pay (523(a)(2)(A))?
Solution Rejected: I had note rewritten to include a warranty by the
lender that the client was not making any representation regarding
their financial condition or ability to pay and lender was not relying
upon client's ability to pay in making note, but was making note
merely as accommodation.
Further Issue: Realtor assisting in negotiating short sale-pay does
not want to sign off on deal if client can name Realtor in action in
having deal close that only benefited Realtor in payment of
commissions, while client received nothing but nondischargeable debt.
Assistance and input on this important issue is appreciated.
Lou Esbin
name="winmail.dat"
The post was migrated from Yahoo.
Facts: Client is negotiating with their lender to permit the short
sale/pay of their principal residence. The loan is a refinanced loan
obligation that included some cash out to the client in the refinance,
including payment of prior purchase money and credit cards. Lender
wants client to sign a promissory note for $50,000 with terms over 5
years.
Issue: If client signs note, defaults and files bankruptcy that
includes the short pay note, would the lender have an argument that
the note was obtained under false pretenses, because client never paid
and never had an intention to pay (523(a)(2)(A))?
Solution Rejected: I had note rewritten to include a warranty by the
lender that the client was not making any representation regarding
their financial condition or ability to pay and lender was not relying
upon client's ability to pay in making note, but was making note
merely as accommodation.
Further Issue: Realtor assisting in negotiating short sale-pay does
not want to sign off on deal if client can name Realtor in action in
having deal close that only benefited Realtor in payment of
commissions, while client received nothing but nondischargeable debt.
Assistance and input on this important issue is appreciated.
Lou Esbin
The post was migrated from Yahoo.