When things get difficult people end up looking for an easier way out! One of the most common things people do when they are in financial trouble is selling off their house. Unfortunately, if they sell it for the quick case, they end up short selling the property. Short selling property means selling your house for less than what you owe on the mortgage. This results in a deficiency (the amount you still owe on your home loan) for which you are liable. Lawyers of Los Angeles based bankruptcy law firm Recovery Law Group say that if you are considering bankruptcy as a way to get rid of your debts, you should avoid the short sale of the property. Some of the reasons why this short sale should be avoided include:
- A short sale damages your credit rating. Since you are defaulting on the mortgage contract, the mortgage company reports this on your credit. Since you settled on an amount less than what you owed the mortgage company this has a negative effect like foreclosure. Since you intend to file for bankruptcy, another negative mark won’t help your credit report.
- A short sale does not help relieve liability if you are contemplating bankruptcy and looking to surrender the property, being held liable for deficiency is not something you would prefer. Since bankruptcy can take care of the mortgage issue, short selling adds another burden which isn’t essential.
- You end up wasting time and money by opting for short sale since bankruptcy can handle this stuff. The short sale just benefits the lender and the realtor.
- When you short sale the house you need to vacate the premises immediately; however, when you surrender the property on filing for bankruptcy, you get to spend more time on the property before you must leave it.
- Tax liability usually accompanies the short sales. Filing for bankruptcy, on the other hand, does not involve any tax problems.
Considering that there are several issues with short sales, it is recommended that you should avoid them. To know more about bankruptcy procedure, you can call 888-297-6023 to speak with experienced bankruptcy lawyers.