Just a little while ago, I wrote this piece on short sales versus bankruptcy, with the general view that bankruptcy would be a much more preferable option for the majority of homeowners in trouble.
But you might also want to consider the other side of the equation. Florida bankruptcy lawyer Chip Parker has posted a short Q and A with real estate attorney David Heekin, who explains some of the advantages to the short sale procedure. You can read it here.
Attorney Heekin’s primary points in favor of short sales are that you might be able to qualify for a FHA or Fannie Mae mortgage quicker if your bankruptcy case is followed by a short sale, instead of a foreclosure on the property. Note that this assume the real estate market turns around quick enough that you would want to get involved in owning again — and no one has a crystal ball to tell us what the market is really going to do five or seven years from now.
Heekin also posits the idea that altruistic debtors may not want to leave that their old neighborhoods with one more empty foreclosed home depressing the area. Point taken, although I’d bet that Lawrence and Methuen folks are on the whole a lot more neighborhood oriented than Florida real estate carpetbaggers.
By Doug Beaton