Glad you got your answers. I think we were on the same page, just thinking of what happens for different paths. Sorry if I mis-understood.

You lawyer sounds great. I just has a friend who's attorney wanted him to file for sole proprieter business debts, but he was not yet foreclosed on his home (which he wants to let go -200k upside down). I told him, don't file yet if you can wait. If you file bk, then foreclosure 6 month from now, then they sue for the negative equity, you will have to file again to get rid of that deficiency judgement. Might be better to wait until after foreclosure to file and flush both the business and house debts in one BK action. Asked him to talk about the best timing with his lawyer.

Yes you can get out of the financial resp. for the mortgage with BK. You just have to get foreclosed on first, then the deficiency becomes unsecured debt that can be extinguished with a BK if you qualify.

I was saying you can't BK a house and get out of the mortgage debt. Meaning it has to be a combination of Foreclosure and BK. I think we are on the same page now?

I will be using the debt forgiveness act on the taxes for a friend I helped with a short sale. When BOA 1099c's her, she will qualify to not have it counted as income, because it was her primary residence. The IRS form instructions have a specific short sale example.

I hope you get everything you are looking for out of these transactions and that your stress level subsides!

** Edit - This is why we were praying that the short sale went through with BOA, because it meant we were done with the whole thing. If the buyer had walked, we would have waited 6 months for foreclosure, up to 3 years in our state to sue for deficiency (Recourse state) and then have to file bankruptcy to get rid of the deficiency which could tack on another 6 months to worrying about this one stupid property.