I see clients all the time who have become aggravated by the short sale process because right when they think they have a deal, their mortgage company changes the terms again. It feels like a hopeless situation waiting on the bank to sign off to let the client move on with their life.
I have good news: the bankruptcy code allows you to discharge any liability you have on your mortgage notes, and you do not need the bank’s permission to do it.
But what about the credit score? Most of the time, if clients are thinking about a short sale, their credit is distressed already. Clients often do not realize that a short sale, like bankruptcy, damages their credit scores too. A bankruptcy filing can be a positive first step in somebody repairing their credit score because it discharges liability on all your debt.
In addition, surrendering a property in bankruptcy avoids the potential problems encountered with successful short sales such as tax liability from the IRS or potential liability for any deficiency. Your realtor loses out on the commission in a bankruptcy, but beyond that, the transactions are almost identical for a bankruptcy client.
If you are tired of waiting on the bank to sign off on your short sale, I would be delighted to explain how a bankruptcy judge can get the job done without the bank’s help or permission. Contact me for a free, initial consultation where I can explain your options.
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