Yes, you could file a Chapter 7, provided you pass the means test and meet the other statutory criteria, such as whether you have filed a Chapter 7 in the past several years.

What you should be doing is let the house go into foreclosure, then file a Chapter 7 right before the Sheriff's sale, thus cancelling the Sheriff's sale. Then you should wait for the mortgage company to start its foreclosure process all over again, all the while living in the property for free. Doing it this way can help you save money and get in a better financial position. My personal record for keeping someone in their house for free is 24 months. Short sales rarely benefit consumers, especially if the property is non-homestead.

Nathan Hansen

651-704-9600

This requires way more than an answer in a forum like this. To be sure you qualify for a Chapter 7 you need to go face to face with a lawyer for a comprehensive analysis of your financial situation. It's complicated. Expect to pay a consultation fee.

If you are planning on filing a bankruptcy, it seems to me there is no point of doing the short sale. Your credit will be toast anyway. You might as well let it foreclose. Then you don't have to worry about what kind of strange agreement you might be required to sign at the closing and whether it might create some sort of a problem when you file a bankruptcy.

Before you make any moves of any sort, however, you need to know if you qualify for a Chapter 7. That might take a couple of hours to figure out.

This response is for general information purposes only, is not legal advice, and does not create an attorney-client relationship.