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Reasons Not To Do A Short Sale If You Are Going To File Bankruptcy

A short sale is when you sell your property for less than you owe on the mortgage, creating a deficiency amount that you still owe on the loan. If you are planning to file for bankruptcy, a short sale is usually not in your best interest. Here are some reasons why:

1. A short sale will damage your credit. You will be defaulting on a contract, and so the mortgage company will report on your credit that you settled for less than the actual amount owed. This can oftentimes have the same negative effect as a foreclosure. If you are going to file for bankruptcy, then you do not need an additional negative report on your credit.

2. The short sale will not alleviate any liability issues. If you are filing for bankruptcy and surrendering the property, then you probably will not be liable for the deficiency amount anyways. In a bankruptcy, you almost always surrender the property in full satisfaction of the debt, so a short sale does not get you away from any problems that the bankruptcy itself does not handle.

3, You are wasting your time and money. If the bankruptcy is taking care of the liability issue, then a short sale is benefiting nobody except the realtor and the lender.

4. You will be losing time that you could spend in your property. When you short sale the house, you must leave immediately. When you file for bankruptcy and surrender the property, you have longer to stay in the property before you must vacate.

5. There is usually tax liability that comes with a short sale. If you are filing for bankruptcy, however, you will not face these tax issues and so do not want to incur them if not absolutely necessary.

These are just a few reasons why a short sale might not be in your best interest if you are planning on filing for bankruptcy. Speak with a Jacksonville Bankruptcy Attorney today to discuss your specific situation.

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