Short Sale Options
When a homeowner is facing the threat of foreclosure, he or she may have multiple options. Individuals in such situations may be able to modify their existing loans, file bankruptcy, or attempt to minimize their credit score damage through a “short sale.” The term refers to a real estate sale in which the property is sold for less than the amount that is owed to the lender.
Not all homeowners are eligible for loan modifications, and many of those who do modify loans end up re-defaulting and facing foreclosure again. Similarly, short sale eligibility is tricky, but it is critical for any homeowner who is also considering bankruptcy to make sure that he or she has experienced legal counsel for help determining the most advantageous path forward.
Attorney for Short Sale Options in Cincinnati, OH
Are you currently facing possible foreclosure in Ohio or Northern Kentucky? You will want to make sure that you evaluate every possible option so you can cancel or reorganize your debt effectively.
The Cincinnati bankruptcy lawyers of Steiden Law Offices help homeowners achieve financial freedom following foreclosure. Call right now to have our attorneys review your case and discuss all of your legal options during a free, confidential consultation.
Overview of Short Sale Options in Northern Kentucky
- Why might a short sale be a bad idea?
- How does the type of bankruptcy affect a short sale?
- Where can I learn more about short sale options in Cincinnati?
Advantages / Disadvantages of Short Sales in Ohio
For many homeowners, a short sale or filing bankruptcy are both preferable options to foreclosure. For certain individuals, filing bankruptcy in conjunction with a short sale can be the most effective way of getting a fresh start.
The primary benefit of a short sale is that the homeowner gets out of his or her mortgage without any remaining mortgage debt or IRS Form 1009-C liability.
Short sales that are completed without filing bankruptcy, however, may carry certain consequences. For example, whereas homeowners can remain in foreclosed properties rent-free for several months, individuals involved in a short sale will be expected to leave their homes as soon as the sales are completed. Additionally, forgiven debt may be considered taxable income by the IRS.
A short sale is an incredibly complicated process, and anyone who is considering it should also make sure to evaluate his or her:
- past earnings
- amount of unsecured debt
- debt-to-income ratio
- likelihood of future income increases.
In some cases, homeowners may be temporarily struggling because of a recent job loss, but such individuals may reasonably expect to find employment offering a similar or possibly even higher rate of pay in the near future.
Short Sales and Chapter 7 vs. Chapter 13 in Kentucky
If a homeowner is seeking to get out from his or her underwater mortgage, Chapter 7 bankruptcy may be the most attractive option. If a person decides to file for Chapter 7, there is not much reason to proceed with a short sale.
Chapter 7 can be an appealing option for homeowners who are temporarily struggling but are expecting income increases because Chapter 7 bankruptcy will clear claimants of deficiency obligations. In many short sales, homeowners sign agreements to repay deficiency balances.
Chapter 13 bankruptcy, on the other hand, allows any remaining deficiency balance between the foreclosure sale price and mortgage amount to be paid out as unsecured debt. When a homeowner negotiates a short sale before filing for Chapter 13, it can dramatically lower the monthly payment as part of his or her Chapter 13 repayment plan.
Chapter 13 also allows debtors to consolidate all of their debt into a single payment, so it is often the preferred bankruptcy route for individuals who are hoping to keep their homes.
Ohio Short Sale Options Resources
Ohio State Bar Association (OSBA) | Short Sales in a Nut Shell — The Ohio State Bar Association is a voluntary professional association open to any person who has been admitted to the practice of law. Its mission is “to promote justice and advance the legal profession.” On this section of the OSBA website, you can find answers to many frequently asked questions about short sales.
Avoiding Foreclosure | U.S. Department of Housing and Urban Development (HUD) — HUD is a Cabinet department in the executive branch of the United States federal government with the mission “to create strong, sustainable, inclusive communities and quality affordable homes for all.” Visit this section of the HUD website to learn more about some of the programs available to individuals at risk of foreclosure and otherwise struggling with their monthly mortgage payments. You can find information about the Home Affordable Modification Program (HAMP), Home Affordable Refinance Program (HARP), and Home Affordable Unemployment Program (UP).
Steiden Law Offices | Cincinnati Short Sale Bankruptcy Lawyer
If you are actively considering a short sale because of the threat of foreclosure, it will be in your best interest to seek legal representation before making a final decision. Steiden Law Offices represents clients in communities all over Kenton County and Boone County in Northern Kentucky as well as Hamilton County in Southern Ohio.
Our Cincinnati bankruptcy attorneys understand the tremendous stress that foreclosure places on every member of a household and we work tirelessly to help individuals find the most cost-effective solutions that allow for people to either keep their homes or minimize their losses. You can have our lawyers provide a complete evaluation of your case as soon as you call or submit an online contact form to receive a free, confidential consultation.
