Home Selling in 91360>Question Details

cameronincam, Home Seller in Newbury Park, CA

Short sale or BK?

Asked by cameronincam, Newbury Park, CA Fri Nov 2, 2012

Wow, where to begin.

Income is not a problem, spending is. (Which I am now watching like a hawk) I've accumulated $40K in credit card debt. My home is worth $460K and my 1st is $405K and I have a $104K Second (total $509K) So without deducting closing costs, I'm $50K short.

I am hoping to get married next Oct. Have minimal savings $10K but take home is around $7K per month. Mortgage is $2,150 $450 second and a large portion of the rest goes to credit card service and living expenses. I've never missed a payment on anything and my credit is in the high 470's.

When we get married, we want to buy a home together. We can live in my fiancee's house for a year or so after we get married, but we really want to move with her and her kids to a different home within a year of marriage (Oct 2014 house buy)

Is a short sale the best option or a full on BK to discharge all the debt? I take full responsibility and feel obligated to pay back, but the house is the sticking point.

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Answers

9
Jana K. Riley’s answer
You really need to speak to a credit specialist and/or mortgage broker to see how a short sale will affect your credit versus a bankruptcy. Both can keep you from obtaining financing for several years. Also, you would have to contact your mortgage company to see if they would cooperate with a short sale, some do not.
0 votes Thank Flag Link Fri Nov 2, 2012
Cameron,

I highly recommend talking with an attorney as well as your CPA for a matter like this. I work closely with a BK attorney for shortsale clients. The initial consultation is free with no obligation. He will give you a better perspective of your options. He will inform you so you can make a wise decision. I work with an attorney for matters like this so my clients get the best possible advice. Contact me, and I will forward the attorney's contact information.

Chris Chin
chin.finance@gmail.com
(805) 258-2870
1 vote Thank Flag Link Fri Nov 2, 2012
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0 votes Thank Flag Link Wed Nov 20, 2013
Why isnt a loan modification in the list of choices? Have you considered or tried that avenue? The issue really seems to lie in the credit card debt. What interest rates are you paying on those credit cards that is making it hard to keep up? Getting rid of the home is not the real solution. In a years time the value of the home may again exceed the mortgage owed. Then you will be in a good spot. Then you may be seeking advice to refinance, pull money out and pay off the majority of your debts. all of this without the damage to your credit. Think about it more. Thats all.
0 votes Thank Flag Link Sat Oct 19, 2013
What i would do is stop paying the second and any 'unsecured credit' the second will not foreclose if the total value of the home does not exceed the first mortgage.

File BK, you can live without a good credit score; Credit Card / debit card is easily obtained. In as little as 3 years you could apply for a new mortgage. Note, the Bk should stop the second from any deficiency recourse it might try later down the road.

This is my opinion only seek out a professional BK attorney and a cpa.
0 votes Thank Flag Link Fri Oct 18, 2013
Hello, you have many options to refinance or even Short Refinance which is a principal reduction refi. You can not have any lates in the last 12 months to qualify. If you short sale, you will have to wait 3 years to buy again and if you BK, you will have to wait 2 years to buy again. You may qualify for streamline refinance with minimal credit qualifying and no appraisal.

You may even consider renting out your current home and buy another when you can realize more equity in the future? The Rents as well as home prices have went up and are on the rise. It only takes a few dozen questions to qualify for what options you may choose from.

http://www.under640ficoscoreloans.com/Pages/Refinance.aspx

http://www.under640ficoscoreloans.com/Pages/ContactSheryl.aspx
Sheryl Arndt, Real Estate Broker – Sr. Loan Officer CA only
REO & Short Sale Specialist
Credit Repair At No Cost
20+ Years Experience
DRE# 01140252
NMLS# 297251
760-486-4225
0 votes Thank Flag Link Thu Dec 13, 2012
Every situation is different. The best thing to do is meet with an agent like myself who can go over all the different options then you can figure out what's best for you and your family.
Please call me at 805-630-3323 so I can get started and help you make a decision.
Thanks
Mary Fealkoff
0 votes Thank Flag Link Tue Nov 6, 2012
Hum, I rather curious how it's possible to have a credit score in the "high 470's" (You're really squeezing every drop out of it.) if you've never missed a payment. You should check your credit reports for any errors or other irregularities.

Otherwise, with your current credit score, I don't see any material difference between a short sale or BK for you. You can verify with a credit counselor on that. Here's my take. With a short sale, you may be able to recover and be able to qualify for a mortgage in 5 years. With a BK, you're out of luck for at least 7 years. So, with your current life plans, both would be poor options.

Realistically, your best bet is to continue to stay current on your payments and hope the current housing rebound lifts you out of trouble in another year or so.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Sun Nov 4, 2012
What you should know is,....
You just cant BK a house.
If you go BK this does not do a whole lot for you with regards to the home.
Generally speaking you can buy a home 2 years after a BK. Here again this is not about a Bk is it?
It is about foreclosure or short sale.
You will probably not be able to purchase a home within 3 years if you short sell.
You probably wont be able to purchase a home for 5-7 years if you foreclose.
Now then a possible option MAY BE that some have been able to completely get rid of a second mortgage in a BK. Not always but some times. Here again it also depends on the type of loan who holds the loan ect.
If you do go BK you will need to reestablish a few lines of credit to be able to purchase a home.
As I see it your home is upside down by around 10%. Is it an option to keep your home?
In addition you will definitely need to raise your credit score at some point.
There are also rules about short sale, foreclosure, with regards to taxes and primary residence etc.
the list of items to consider is endless and there is no simple answer and in fact come 2013 the rules change yet again. It is my opinion that for the last 4 years we had some irresponsible rules and they all end soon. You probably could not if you wanted to short sell or foreclose in time and may incur some very serious tax penalties. I would not take the question lightly. You should consult a CPA. From what little I see from you wrote, My suggestion would be to keep the home you have and hang in there. Housing is already on the rise. Hopefully by the end of 2013 you may even be at a break even point. Start getting your credit in order. soon you will have a wife and child. Be responsible and and set an example.
Find a way to cut our expenses. cut out the crap like cigarettes, starbucks, eating out, etc. make your own lunch get a room mate ( rent out a room ) to help with costs. Fix it.
Be determined the whole way.
Bankruptcy attorneys are notorious for saying the problem will go away wen it comes to homes only to be proven wrong time and time again. Leaving you holding the bag and having a crappy financial situation.
If it were me,... I would pay down the cards the 10k. I would live under 5k a month and pay the other 2k towards the cards each month taking 25 months and getting on top of it all. I have been in your situation and I did it time and time again. each time I learn to spend less on cards.

Harold Sharpe - Broker
So Cal Homes
(951) 821-8211
harold@socalhomes.biz
http://www.socalhomes.biz
California Department of Real Estate Broker License # 01312992
0 votes Thank Flag Link Sat Nov 3, 2012
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