ShouldIletthe bank foreclose or should I try a short sale to get out of my house?

UPDATED: Feb 7, 2011

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ShouldIletthe bank foreclose or should I try a short sale to get out of my house?

I was 23 when I purchased my first home. I did not know anything about buying a houseand did not do my research on the area. Crime is very high in my neighborhood and my family does not like to be home while I’m not there. We really want to sell and get out of the neighborhood but because of the economic crisis my house is now worth about $175k but I owe $234k; I do not have almost $60k to just give to the bank. What can Ido? I have only had the home for 3 years? Any other alternatives to foreclosure/short sale?

Asked on February 7, 2011 under Real Estate Law, Illinois


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

1) Always try a short sale rather than simply allowing the bank to  foreclose; if the bank accepts a short sale, the impact on your credit is less than with a foreclosure and there's no chance they'll try to come after you later for the remaining balance on the house. Maybe the bank won't accept a short sale, but it's definitely worth asking about.

2) Can you rent out  this home while living elsewhere? If you can, that has three possible advantages:

a) If you can more-or-less cover your running costs, you may be able to hold onto the home until the market improves enough to sell  the home above water.

b) You may be able to now deduct certain other expenses (e.g. utilities, repairs) as a business expense.

c) If this become investment property and you at some point have to declare bankruptcy, what you can do with invesment property in a bankruptcy is more flexible than what you can do with your primary residence.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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