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Megan C
Megan C , Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16539
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I filed for BK in 2009. My home loan was not reaffirmed, until

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I filed for BK in 2009. My home loan was not reaffirmed, until Nov 2012 I have made payments on time. At this point, is it best to just walk away or go through a short sale? I'm interested in the best choice for rebuilding my credit asap.
Submitted: 3 years ago.
Category: Finance
Expert:  Megan C replied 3 years ago.
Thank you for your question, and thanks for using JustAnswer.com. If you are trying to choose between a foreclosure and a short sale, the short sale will be your better bet, and here's why.

With a short sale, you can keep current on your payments and be in control of the sale of your home. While your credit score will take a hit very similar to what it would for a foreclosure, you will be eligible to purchase a new home immediately, although finding a lender would be difficult if not impossible. With a foreclosure, you cannot purchase another property (with a loan) for 5 to 7 years. The credit score hit for a short sale is 50 to 130 points. For a foreclosure it's 105 to 160 points.

The negative information will stay on your credit report for 7 years in the event of a foreclosure. With a short sale, you do have a negative record but it's not as glaringly obvious. Many lenders will report these "paid less than agreed" or something similar.

If you can do it, a short sale will be your best bet. There is a very detailed synopsis of the difference between a short sale and a foreclosure, HERE.

Please let me know if you need anything additional. Thanks again for using JustAnswer.com and have a happy, and safe, 2013.

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You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Customer: replied 3 years ago.

I understand that in a typical situation, but does this change because the loan was not reaffirmed? My current Credit Report shows the home was included in the BK.

Expert:  Megan C replied 3 years ago.
Thank you for your follow up. Basically, when you don't reaffirm your mortgage after the bankruptcy that means you are not personally liable for the debt if you were to walk away from your home. This means that the lender cannot come and sue you for any deficiency.

Your credit report also shows your mortgage as discharged during bankruptcy. So, even though you are current with your payments this information is not going to your credit report.

CLICK HERE for a great explanation of how not reaffirming your mortgage after a bankruptcy affects your credit.

That being said, the loan balance is already showing as charged off. You can walk away, but the foreclosure could still show as a public record on your credit report. If you can short sale, you can avoid having a foreclosure public record noted on your report.

You can read more details about this situation, HERE

Thanks again for using JustAnswer.com and have a happy, and safe, 2013.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Megan C and other Finance Specialists are ready to help you
Expert:  Megan C replied 3 years ago.
Thank you for the positive rating. Please remember me the next time you have a question. Simply enter "MyVirtualCPA" in the subject of your question, and it will be routed directly to me. Thank you again for using JustAnswer