As an experienced Florida foreclosure defense attorney I'm continually asked the question of "How does a short sale or a
foreclosure
affect my credit score?" This being the case I felt it was a subject that needed to be briefly addressed.
If you are asking this question you are most likely deeply concerned with how either of these ugly terms will affect your credit score and which one may be the better choice of the two burdens. Instead of being intimidated, let me at least educate you on your choices and the consequences. Though the reality of a short sale or foreclosure is not positive, researching what you will face is a good start to finding the best solution to your individual situation.
Since every case and situation is different, seek the advice of an experienced Florida foreclosure defense attorney. An experienced Florida foreclosure defense attorney that has the experience, knowledge and understanding of how every facet of this process affects you.
With a short sale, lenders typically take a loss on a loan that reflects the difference between what you owe and what the property actually sells for. They must be willing to accept this level of risk, and may execute one of two actions in a short sale: A) Sue you, the homeowner, for the difference; reflecting on your credit as a deficiency judgment which could profoundly impact your credit score in a negative way, or B) retain the services of an experienced Florida foreclosure defense attorney that can negotiate a settlement and avoid any deficiency judgment having the lender absorb the loss, show it as a tax write off, and the IRS would see this as income sent your way. You would then be taxed based on the difference of the lender's loss. This could prove to be extremely costly; however there would be no deficiency judgment showing on your credit.
Maybe your mortgage payments are current now but you foresee issues with your ability to continue to make them. Partnered with being current, if you have available assets to pay the difference within your short sale, then there should be no need for a negative impact to your credit. Hence this would be the ideal situation, but an unlikely alternative for most.
Now, a foreclosure is exactly what it is. You have fallen behind in your mortgage payments; you cannot sell your home due to housing market conditions and have chosen to walk away. A completed foreclosure can stay on your credit for up to 10 years and can literally sink your credit scores. Your credit score could potentially drop anywhere from 100 to 400 points; severely impairing your credit. If you are forced into a short sale, behind on your payments, and are unable to pay the difference, this "short sale" could reflect on your credit just the same as a foreclosure would.
Either situation that confronts you, whether it is after your foreclosure or a deficiency judgment from a short sale, the key to recovering from them successfully, is to restore and improve your credit once the damage is done.
With your positive actions, and the
Carman Law Firm Credit Restoration Program
you can fix your credit, and the dream of becoming a homeowner once again could someday become a reality.
For more information, visit our website at
www.clfcredit.com