Why Not Short Sale?

Hello Paul, I have been trying to sell my home taking a huge loss of coming out even…meaning the $250K i downed is gone with me not owing anything to the 2 lenders or them to me.  However, no one is buying my home even at this crazy low price for me to get out without owing the banks.  now i feel like i have to resort to foreclosure/bankruptcy measures if i have to lower it again?   I am sorry i have to ask lots of questions. My question is more specific to virginia’s law on bankruptcy and foreclosure. 1) should i file for bankruptcy first or go through with foreclosure first to have it be included in ch.7? 2) i have a 1st trust and 2nd trust on my home. I hope to include this into my chapter 7.  Would both trusts be able to be included or would the 2nd lender be able to sue me to pay them back? 3) Will foreclosure be reported on my credit along with bankruptcy?  is there a way i can avoid it and just have the chapter 7 only reported? 4)  will I still have to wait the 5 yrs to buy the home even though the foreclosure is included in the chapter 7? thank you so much for any advise you can offer. LV ——— Hello LV, What about the option of a short sale?  A short sale with full release of liability would avoid a foreclosure and a bankruptcy.  Why not investigate that option? The questions you’ve asked can only be accurately answered by a bankruptcy attorney.  I’ll answer all four of them with regards to credit reporting. (1) If you knew that a short sale was not an option and you passed the means test for a Chapter 7 then filing bankruptcy prior to foreclosure would be preferred over a foreclosure prior to a bankruptcy. (2) It may be possible for both to be included. (3) Filing bankruptcy prior to foreclosure will require the credit reporting on the tradeline to freeze at the time the case number is assigned and if the bankruptcy is successfully discharged, then the tradeline will show no information past that date.  It is possible for the public records section of the credit report to reflect a foreclosure and is most common in judicial foreclosure states.  Virginia’s most common method of foreclosure is a non-judicial power of sale. (4) According to FNMA you will; but if you complete a short sale then you can buy again in two-years. Thanks for the questions and talk to a bankruptcy attorney! Paul This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.