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Posted: Sat Nov 22, 2008 2:33 am Post subject: Bankruptcy Vs other options

We built a new home. Starting the process over a 18 months ago. We had an offer on our current home. However prior to closing the buyer backed out. We kept his earnest money but now are stuck with two mortgages. We have not been late on the yet on the payments to our old house but will happen soon.

Does anyone know if bankruptcy can be filed on just that mortgage, with endangering our new house? Are there any other suggestions?

The interest rate on the old house is pretty high. I called to refinance to lower the payment, but the lender will not because its a modular home. Even though they are using it for collatoral now! I have tried to rent it, but there are to many properties out there on the market for rent.

Not sure what do!!!

Niicss · Posted: Sat Nov 22, 2008 3:44 am Post subject:

Hi Guest!

Yes, you can definitely file bankruptcy on your old property without including the new one. However, did you speak to the lender about a deed in lieu option or a short sale? If you can do a short sale, it will hamper your credit much less that that of a bankruptcy. Both these processes are same where you need to sign away the property to the lender who will then try to sell it in the market to recover the debts. There can remain a deficient amount which the lender generally forgives in case of deed in lieu. But in case of short sale, the lender may ask you to pay it off.

In case, these options are not accepted, then you may file Chapter 13 bankruptcy. This will help you in reorganizing the debts and you will be given a plan by which you can pay off the debts within 3-5 years. You will also be able to save the property. To know more about Chapter 13, check out the given link:
http://www.mortgagefit.com/bankruptcy/chapter13.html

Thanks

Guest

"If you can do a short sale, it will hamper your credit much less that that of a bankruptcy. Both these processes are same where you need to sign away the property to the lender who will then try to sell it in the market to recover the debts."

How are both processes same? Niicss, you mean to say bankruptcy and short sale are same...this is so confusing

jameshogg · Posted: Mon Nov 24, 2008 11:43 pm Post subject:

Hi adrian,

Niicss has mentioned that deed in lieu and short sale are the two processes which are quite similar. In the process of deed in lieu, the deficient amount is forgiven but you need to pay taxes on it whereas in short sale you will have to pay that deficient amount.

Yes, short sale will affect your credit much less than that of a bankruptcy. To know more about how short sale affects your credit score, check out the given link:
http://www.mortgagefit.com/discuss/shortsale-crediteffect.html

Thanks

Guest

i don't get this. because Nics says short sale hampers credit less than bk. and then he speaks about both processes. So doesn't that mean he's talking about bankruptcy and short sale being similar processes?

jerry · Posted: Wed Nov 26, 2008 3:48 am Post subject:

Hi adrian,

When you do a short sale, your credit will get lowered by 75-100 points whereas in case of bankruptcy the credit score will reduce by at least 250 points.

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Bankruptcy Vs other options