How can I get rid of non-cancelled mortgage debt after a short sale?

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How can I get rid of non-cancelled mortgage debt after a short sale?

My short sale (on my 2nd home) closed almost 10 months ago. The sale resulted in a $200K deficiency for the 1st mortgage, which the lender has now submitted to a collection agency. I cannot afford to pay this, and that’s why I proceeded with the short sale in the first place. What would be my available options in dealing with this debt?

Asked on July 26, 2011 California

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

I am so sorry for your situation.  The key to having the lender agree to the short sale is to make sure that they waive the deficiency, this way they can not come after you.  The reason that you probably had no problem getting them to agree to sell the property for so much less than the mortgage price is because they did not waive it and now they can come after you personally for the money.  I would strongly suggest that you seek help either negotiating the debt or that you seek help as to you options to extinguish it, like bankruptcy.  They will not go away unless and until you do something about it all.  Good luck to you.


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