Bankruptcy versus Short Sales

by DeLadurantey Law Office, LLC on November 22, 2013

Bankruptcy versus Short SalesIf you are struggling to pay your mortgage loan and you want to avoid foreclosure, filing a bankruptcy case might help. Another option many homeowners consider is pursuing a short sale on their home. Both choices can be beneficial, but deciding which is better for you depends upon your individual circumstances. Factors to consider are:

How much time do you have?  The short sale process can be time-consuming. It involves numerous parties, a significant amount of negotiations, and at the end of the short sale, there is no guarantee that the sale will get closed successfully. A Chapter 7 or Chapter 13 provides you immediate financial relief. The automatic stay prohibits all collection efforts while your case is pending. A Chapter 7 filing lasts 3 to 5 months. A Chapter 13 lasts 3 to 5 years, but it allows you time to cure your past due mortgage payments. When you complete your bankruptcy, you receive a discharge order that eliminates all or a large majority of your debt.

Will your lender pursue a deficiency balance?  After your home is sold in a short sale, the deficiency balance is any amount that remains due and owning on the mortgage loan. It is the amount the sale is “short” in paying off your loan.  Depending on where you live, this can be a significant financial issue for you.  There is no guarantee your mortgage lender will waive the deficiency after a short sale in most states. There are a few states that require the mortgage to accept the short sale amount as full payment, but you should confer with a local attorney to discuss this. In contrast, by filing for bankruptcy, a debtor can typically discharge all or the majority of any deficiency balance on a mortgage loan.

Do you have debt in addition to your mortgage?  A short sale only deals with your mortgage debt. A bankruptcy filing allows you to deal with all of your finances. Thus, if you have credit card bills, medical bills and other types of debt that extend beyond your mortgage loan, a Chapter 7 or Chapter 13 filing allows you to handle all of your financial issues at once.

If you are struggling to pay your mortgage and/or you are facing foreclosure of your home, you should contact an attorney at DeLadurantey Law Office, LLC to discuss what options are best for you.

Contact The “Milwaukee Bankruptcy Attorneys,” DeLadurantey Law Office. LLC.   DeLadurantey Law Office focuses on Chapter 7 and 13 bankruptcy, debtor’s rights, debt negotiations, debt relief, mortgage loan modifications, and foreclosure defense.  A “defender of the little guy, “DeLadurantey Law Office serves the following location – Milwaukee, South Milwaukee, West Milwaukee, Waukesha City, Waukesha Town, Kenosha, Racine, and all other municipalities in Milwaukee County, Waukesha County, Kenosha County, and Racine County.  We can be contacted by phone: (414) 377-0518 and can be found on the Internet and on Facebook.

 

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