Should I file bankruptcy before or after my home goes into foreclosure or shouldI instead proceed with an approvedshort sale?

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Should I file bankruptcy before or after my home goes into foreclosure or shouldI instead proceed with an approvedshort sale?

I am facing foreclosure however the bank has approved me for a short sale. I really do not know which is better because they both are negative on your credit report. What should I do?

Asked on May 31, 2011 under Real Estate Law, Pennsylvania

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You really need to sit down with a bankruptcy attorney or other qualified financial professional to discuss the specifics of your financial situation.  For instance what, if any, other debt do you owe? What assets are at risk (do you own any exempt property)? A bankruptcy is a big step and one can only be filed  as often as statutorily allowed (depending on the Chapter filed you can only file every 8-10 years or so). Granted your credit report will take a hit either way, but with a short sale a negative notation will only remain on for 7 years; a bankruptcy will be reported for 10 years.  Again, consult with a qualified professional regarding this.

Note:  If you do opt for bankruptcy, file sooner than later as deficiency judgments are permitted in PA. And the sooner that you file the sooner your credit will clear.


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