What effects your credit more bankruptcy or foreclosure?

Asked by Rikers, Albany, NY Sat Nov 21, 2009

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5
Lucy Liou, Agent, Danville, CA
Sun Nov 22, 2009
The immediate impact of bankruptcy or foreclosure on your credit is about the same. There is not much difference between bankruptcy, foreclosure , or short sale. The more important question should be which one can help you restore your life faster. You may not eligible for filing personal bankruptcy protection if your mortgage amount is more than 1 million or you may have the huge tax consequence depend on what type of property is foreclosed. or sometimes short sale does not make any sense at all. So Please consult with your tax professional and bankruptcy attorney before you make this tough decision.
1 vote
Joanna Jensen, Other Pro, Livermore, CA
Thu May 6, 2010
Hi Rikers,
my husband is a loan officer so he is used to looking at credit reports.

I asked this very question his comment was bankruptcy is better you can buy within a few years.

Foreclosure is the worst on your credit. Right now lenders are doing everything in their power to get home modified if it makes sense.

If you still have income you may consider working with the lender to see if you can do a modificaiton.

Then there is the posability of Short Refinance, similiar to a short sale but YOU KEEP YOUR HOME.

I specialize in Home Owner Retention. Helping people keep their homes. Maybe one of the few realtors who try hard to do loan mods and short refinance instead of a Short Sale to save you from foreclosure.

JoAnna Jensen
Legal Assistant
Realtor
Volo Law Group
925 699 5041
0 votes
Lawrence Tob…, Agent, Lansdowne, PA
Fri Nov 27, 2009
In my opinion, although all 3 being bad.. Short sale has the least impact on your credit. forclosure coming in second and bankruptcy being last. In a short sale as long as you have other open credit that you are currently paing on time (no lates) you should be able to purchase a new home within 2 years.

These are just my opinions, I would say speak with a tax adviser as well as a bankruptcy attorney for full details.
0 votes
Sunil Sethi, Agent, Fremont, CA
Sun Nov 22, 2009
Your question is not easy to advise on because you haven't provided much information and why the two choices and to be exclusive. You could have your home foreclosed on or conduct a short sale and conduct a bankruptcy. However, you really should have a one-on-one discussion with someone competent in credit, legal and tax matters to discuss the merits of all options.

To get the answer to how long bankrupty, or foreclosure or a short sale will impact your ability to get a new home loan have a talk with a lender. Tell them you just went through bankruptcy how long do I have to wait to be able to get a home loan, then walk through your other scenarios.

-sunil

SUNIL SETHI REAL ESTATE

Sunil Sethi / Broker, President, REALTOR, MBA, CPA / SUNIL SETHI REAL ESTATE
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0 votes
Scott Summers, , San Ramon, CA
Sun Nov 22, 2009
Bankruptcy hurts credit more!. And it won't stop the foreclosure anyway, just postpone it. (at least in CA.) Short Sale is the way to go if you care about your credit.
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