Times are definitely hard for a very large number of people in today's economy. We get calls frequently from clients and referrals who are either upside down in their home (owe more than it is worth) or behind in payments. Some have already received foreclosure notice. Usually the call is from someone that is very stressed out and doesn't know what to do. They are upset and want advice.
First thing they need to realize is they are not alone! Not by a long shot! Not that this makes their situation better, or solves their problem, but it does help to know that you are not the only one. That there are so many people going through the same struggles as you. Your credit will be effected negatively during these times, but you can re-coop! There is life after a foreclosure or a short sale!
What should you do? Should you do a short sale or a foreclosure you ask? Well, this is where things get tough to answer. You can look up on the Internet and see articles on Short Sales vs Foreclosures. Many will say that it is better to do a short sale since it won't effect your credit as bad or for as long. I say that you should always seek legal advise for your situation and for your state. Even that might not be very clear at this point as there is not much legal precedence on some of these situations. We are in relatively new territory.
Then there is the questions about whether the second will try to collect after a short sale or a foreclosure. Some people think that when the second releases the lien so the home can be sold that they are releasing the home owner from the debt. Not always so. Most of the lenders are not giving a debt forgiveness on the second mortgage. They may be willing to allow the home to sell, and be compensated a token amount at the time of the sale, but unless you get in writing that they are giving a total debt forgiveness then they may still pursue payment of the debt, which may force someone without the means to make arrangements to pay it back into bankruptcy. They may settle for a smaller amount, but get everything in writing and again, always get legal advice and tax advice! Still, there is life after a foreclosure or a short sale, even after bankruptcy!
You may go through a tough time period like so many are going through right now. But, you will recoop. You will survive. You are not alone. You can look at it as a fresh start, a new beginning, another chance.
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