In our last blog we gave you some reasons why short sales are often not all they’re cracked up to be. In this blog we look at the reasons you might want to do a short sale and why other alternatives may serve that purpose better. Sometimes it IS worth trying to sell your home on a short sale, but it is certainly smart to look at all the options.
You want to do a short sale because:
1. You can’t afford the house anymore and so need to get out of it.
The problem is that you may well still owe money on either the 2nd mortgage or on junior liens (like judgments, child and spousal support, and income taxes) that don’t get paid or only get partially paid. A short sale will have you jumping from the frying pan into the fire.
2. You may be trying to do a short sale especially to lower the amount you owe on a 2nd mortgage.
Even though a 2nd mortgage creditor will usually get nothing if the 1st mortgage is foreclosed, but they are often still very reluctant to lower their balance to let the short sale happen. Often they will demand that you agree to pay them a part of their losses over time, which you may feel forced to accept to rescue the short sale.
3. Your title may be saddled with other liens besides your mortgage, usually involuntary ones like a tax, judgment, or construction lien, which you’re trying to escape.
Even if these kinds of lien holder agree to partial payment from the short sale, in most cases you will continue to owe these debts. With the loss of security in the house, they will likely try to collect even more aggressively.
A Chapter 13 bankruptcy may be able to either 1) let you keep your home by reducing what you pay to your other creditors, or 2) buy you more time to sell the house so you’re not trying to do so under pressure. A Chapter 13 may even get you out of a 2nd or 3rd mortgage altogether. And it very likely would provide a sensible way to pay any debts that have to be paid, like back property or income taxes, or child or spousal support. Most importantly, instead of worrying about when the next axe is going to fall, all collection action stops while you pay what you can afford to pay.
Portland Bankruptcy Law Group has the experience and knowledge to handle your case. Our bankruptcy lawyers are extremely familiar with and are well versed in all aspects of bankruptcy law. Contact us today!