Do You Have Enough Time?
The short sale process takes a significant amount of time. There are several parties that must be included in the negotiations and even at the end of the short sale process, there is no guarantee the sale will close. A personal bankruptcy filing provides you with immediate relief from your debt because the automatic stay prohibits creditors from pursuing any collection activity against you while your Chapter 7 or Chapter 13 is open. A typical Chapter 7 case lasts four to six months, so it is a relatively quick form of comprehensive debt relief. A Chapter 13 filing lasts three to five years, but during this time you can cure your delinquent mortgage payments and emerge from your bankruptcy case not only current on your mortgage loan, but also having the majority of your debt discharged or eliminated.
Will You Be Liable To Pay A Deficiency Balance?
When you sell your home in a short sale, it means there is a deficiency balance that is left due and owing after the proceeds of the sale is applied to your loan. It is the amount that the lender is “short” of being paid in full. Depending on the jurisdiction you live in, your mortgage lender may be required to waive its right to collect the deficiency balance and accept the short sale amount as full payment. However, it is essential that you consult with a local attorney to determine what laws apply in your situation. In contrast, if you file a personal bankruptcy case you can usually discharge the deficiency balance on your mortgage loan.
Are You Overwhelmed By Debt?
If your mortgage is the only debt causing your financial troubles, then a short sale is an effective debt relief option. However, if you have debt in addition to your mortgage, filing for bankruptcy can allow you to deal with your credit card bills, medical debt and other types of debt. A Chapter 7 or Chapter 13 case allows you to deal with all of your financial problems at once.
If you are considering a short sale or filing a bankruptcy and you need help determining which option would be best for you, contact Fitzgerald & Campbell to schedule an appointment. We do not offer just one debt relief option, we don’t push you in one direction. If bankruptcy right for you, we will tell you. If it’s not, we will tell you that. If bankruptcy is your get out of debt plan, it needs to be done right. It needs to be in the hands of experienced lawyers who have been there before. Contact us today!