Short Sale or Bankruptcy?
This is one of the most common questions that comes up when I first sit down with people that are contemplating a short sale. While there are no clear black and white answers, each option has merit. There are a few reasons to consider a short sale before filing for bankruptcy.
One of the major elements is the scope of damage to your credit. Recovery time is MUCH shorter through the Short Sale route Vs. Bankruptcy. Depending on which chapter Bankruptcy you file, a BK can stay on your credit for 7-10 years. If you can complete a short sale, it will most likely show up on your credit as a "short pay", and will impact your credit for aprox 2 years.
Another very important element that is often overlooked, is that a completed short sale displays due diligence as a home owner to future banks. When a bank underwriter reviews your personal history for a potential home loan, it looks much better to display that you went through the efforts of short selling the property vs. walking away/foreclosing and filing for a Bankruptcy.
After following up with a few of my successfully completed short sale clients from 2009, they are telling me that their FICO scores are back up in the mid 600's in less than a year after the short sale! If you are considering a short sale, or would simply like to discuss the process, please feel free to contact me. **FREE** Never a charge for my short sale services!
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