Bankruptcy or Short Sale - Which is Best?
Bankruptcy is a legal process that may stop a foreclosure and allow you to reorganize your debt and keep assets. However, what really may happen is the bankruptcy only delays the foreclosure — your smaller monthly expenses will be removed, but you still have to shoulder the burden of that big mortgage every month. If you are not able to maintain your mortgage payments after bankruptcy, the house will foreclose anyway. That’s why a short sale may be the most prudent way to turn your financial life around and restore your peace of mind.
Also, filing for bankruptcy makes it very difficult for you to sell your property. Negotiating a short sale is virtually impossible.
Federal bankruptcy law is intended to provide a fresh start to an honest debtor.
Your bankruptcy case is started with the filing of a petition by a bankruptcy attorney. It must be accompanied by a statement of your assets and liabilities and schedules listing your creditors. The property you can keep through the bankruptcy is determined by specific exemptions available under state law. You attorney can advise you about the fait and disposition of your assets.
As an individual, there are two kinds of bankruptcy chapters available to you under federal law: Chapter 7 and Chapter 13
First a means test must be applied, determining that your residual income for the next five years will be less than $6,000. Then a court-appointed trustee collects your assets, reduces them to cash, and makes distributions to creditors. Because there is little or no property in chapter 7 filings, they are often referred to as “no-asset cases.” You are then discharged of any further responsibility for past debt.
Unlike Chapter 7, all of your assets are not liquidated in Chapter 13 bankruptcy. Chapter 13 bankruptcy provides time to catch up on past due balances while keeping your property. Typically, a repayment plan lasts between 36 and 60 months. A court-assigned trustee examines and prioritizes debts to determine any and all assets that will be liquidated for the purpose of paying off secured creditors.
A Short Sale Makes Better Sense — Financially and Emotionally
The “B” word, Bankruptcy, and the “F” word, Foreclosure, stir up all kinds of personal embarrassment and lasting financial stigma including:
- Lasting black marks on your financial records — you may not be able to borrow a minimum of 7 years
- Background checks by prospective employers will reveal your past
- Your privacy is damaged when legal notices appear in your hometown paper
- Your ability to get insurance is affected — coverage automatically costs more
A Short Sale Brings Immediate Peace of Mind
- No permanent financial damage — you can get a new mortgage in as little as 18 months
- You can rebuild your credit and pay down your debts starting immediately
- Financial freedom is a reality
Bankruptcy not for you? To discover how a short sale can solve your problems, talk to a member of the Mark Boyland Short Sale Team in strictest confidence. We have successfully closed short sales in Westchester, Putnam, Dutchess and Bronx counties. Call 1-800-244-6005 or fill in the form below:
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DISCLOSURE: The brokerage is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.