When it comes to the big picture, a bankruptcy filing comes with its own list of benefits. From curing deficiencies to offering debtors a fresh start, bankruptcy can raise insolvent borrowers from the murky waters of bad debt and put debtors back on the righteous path to creditworthiness. But without a proper strategy, the road back to solvency can be long and hard. It’s no wonder then that many savvy borrowers are opting to short sell after their bankruptcy discharge.
If you’re among the thousands of debtors who’ve surrendered their homes in a recent bankruptcy, you may be wondering, what’s the point of entertaining a short sale? The bankruptcy has essentially wiped your obligation on the home, so why bother? Let’s examine some of the numerous ways in which short selling after a bankruptcy can work to your benefit.
It’s not over…
Though you may be relieved to know that you’re no longer liable for the mortgage payments, it may frighten you to find out that caring for the home remains your responsibility. That’s because, while your personal liability for the debt was eliminated, your name is affixed to the property until your lender has the property foreclosed.
A short sale puts you in control!
A short sale enables you to take the wheel, helping you get rid of the property much more quickly than passively waiting for your lender to foreclose. Lenders often drag their feet on foreclosures, leaving you to hang in the balance.
In the meantime you will be responsible for the home’s utilities, maintenance, HOA fees and the like. Not to mention, remaining on the title will make it extremely difficult to qualify for new a mortgage loan anytime soon.
More time at home and less time in wait
For bankruptcies that end in foreclosures, the “seasoning” or waiting time a borrower must wait before qualifying for a new mortgage loan can range anywhere from three to seven years; while the seasoning period after a bankruptcy and short sale can be as little as twelve months! As a side bonus, initiating a short sale can buy you additional time in your home (at no cost to you!) until the transaction is finalized.
No matter the type of bankruptcy, having a short sale after a bankruptcy discharge can truly be a benefit to your emotional and financial well being by making the best out of an otherwise unpleasant situation. A short sale will expedite the recovery time and will result on a much smaller hit on your credit. If you are considering bankruptcy, or need further guidance on whether a post-discharge short sale is right for you, consult with an experienced bankruptcy attorney to explore your options in greater detail.