In Oklahoma City, Short Sales and bankruptcy are not exclusive

Distressed homeowners in Metro Oklahoma City are coming in increasing numbers. Although our city is faring better than most, unemployment has risen from 3.& to 6.1% in one year. I was in the mall today, and I noticed that two stores have closed very recently. Both Bacrach's and American eagle Outfitters have been here a long time, but are now gone. If we take this, medical problems, and divorce, people are having problems paying there bills. I remeber the bad old days of the 1980's when Oklahoma was devasted economically, and i can remeber the daily calls in my retail business for when the payments would be made. I have empathy for what these folks are going through, and declaring bankruptcy is not uncommon.

Let's first talk about the difference between bankruptcy and foreclosure. If you want to qualify for an FHA loan at a later time, you can be considered two years after bankruptcy. Foreclosure makes that three years or more. Foreclosures also have what is typically around a 450 point credit hit. If you were at 640 which you need for FHA think about how long that is going to take you after foreclosure. Foreclosure also stays with you for 7 years. I am not recommending you to avoid bankruptcy even if you are being harassed, but I am telling you to pursue a short sale regardless.

What a Chapter 7 liquidation does to the foreclosure process is to stop it in place. It does not prevent it from happening it just delays it. One advantage to doing this is that the bankruptcy can eliminate the possibility of a mortgage company coming after you for a deficiency judgement and of also sending a 1099 to the IRS for taxable forgiveness of debt. So from a personal standpoint, you get rid of all your personal debts excepting taxes, but once the process is done and finalized, the foreclosure starts up again.

So why still do a short sale since you have no personal liability? That is simple, foreclosure is still worse for your future credit. It is not just that your credit rating is hit harder, When you eventually go for a home loan think about what the lender sees if you have a foreclosure showing on the report. If you do the short sale route, it goes away within two years from the report. Yes they see a bankruptcy, but that is an easier explanation. Losing your job, having unpayable medical bills are understandable in making the decision to clean your slate. Remember that by doing a short sale you are saving the mortgage company money, since a foreclosure is more expensive in time and money. We can help you with your distressed home. Email me at joe@joepryor.com, or for more answers you can go to our web site for short sales, www.avoidforeclosureoklahoma.com.