Short Sale VS Chapter 7 Bankruptcy
Quite often Borrowers ask the question should I file for chapter 7 Bankruptcy Services or proceed with a Short Sale?
Depending on your situation you may want to do both. If your intention is to keep your property and you can afford your Mortgage a Short Sale is not the Solution for you. In most cases Borrowers who file Bankruptcy find it is beneficial in conjunction with a Short Sale.
How can filing a Chapter 7 Bankruptcy help me?
A Chapter 7 Bankruptcy is an often underutilized strategy beneficial if a Borrower has a Foreclosure sale date scheduled on their property or if a Borrower has many debts that they are unable to continue to make monthly payments for. A Bankruptcy will halt a property from going to Foreclosure anywhere from 30-90 days or longer.
So what is discharging a debt and what does it mean?
Discharging a debt means that the debt is no longer enforceable against the Debtor personally
Below are some of common types of debts that are not discharged:
- Debts for most taxes
- Debts incurred to pay non-dischargeable taxes
- Debts that are domestic support obligations
- Debts for most student loans
- Debts for most fines, penalties, forfeitures, or criminal restitution obligations
- Debts for personal injuries, or death caused by the debtors operations of motor vehicle, vessel or aircraft while intoxicated
- Some Debts that were not properly listed by the debtor
- Debts owed to certain Pension, Profit Sharing, Stock Bonuses or other retirement plans
- Debts for Thrift savings plan
So which Debts are dischargeable?
- Debts that are typically loans on a house
Important Note: For Borrowers whom are in Foreclosure, Bankruptcy is usually not the sole answer as the Borrower must qualify for the Bankruptcy. This means a work out must be made with the Bankruptcy court as well as the Bankruptcy trustee a monthly payment typically 1 and ½ times the amount of the Borrowers monthly Mortgage payment is required to proceed with the Bankruptcy.
When a Borrower is forgiven for the Debt, meaning the Bankruptcy is discharged. The Lender will then continue the Foreclosure process, affecting the Borrowers credit report, credit score , as well as possibly employment status.
A Short Sale once completed will show as a “Satisfied Debt” on a Debtors Credit Report.
For more information about Bankruptcy, Short Sales and other options to Stop Foreclosure now as well as to receive a FREE 9 part Foreclosure video series go to www.FastForeclosureSolutions.com
*Disclaimer* This information is not intended to be legal advice. Please consult with a local Attorney such as Timothy Owens of The Owens Law Firm for Bankruptcy or other legal advice.