Should You Short Sell or Declare Bankruptcy?

 Posted on December 13, 2023 in 341 Meeting

When debts snowball beyond control, two common paths can provide a fresh financial start—selling property at fair market value using short sales or pursuing bankruptcy to legally liquidate assets and discharge balances. How do you determine which route best fits your unique financial scenario? Depending on your situation, a Texas lawyer can help you determine which path may be ideal for you.

When Home Values Drop But Mortgages Remain High

It is not uncommon for people to end up owing more on their home loans than their houses' worth. If you are underwater on your mortgage but making payments has become a significant struggle, a short sale could give you a way out without completely starting your finances over.

How Short Sales Help

A short sale allows you and the lender to mutually agree to sell the home at fair market value, even if it does not cover what you still owe. The lender takes a loss on the loan but gets something. You also get debt relief because, in most short sales, the lender agrees to forgive the remaining mortgage balance not paid off by the sale. This takes the crushing weight off your shoulders.

Filing Bankruptcy Provides Comprehensive Debt Elimination

If you are buckling under the weight of medical bills, credit cards, personal loans, or other major debts that have nothing to do with your home, bankruptcy may offer the fresh start you need. By discharging the debts, this legal process can eliminate large portions of what you owe - meaning you are no longer legally obligated to pay. Collection calls and letters also must stop immediately after filing.

The Catch With Bankruptcy Relief

Bankruptcy usually requires those filing to hand over certain assets, depending on the chapter you file with. The court liquidates these to pay back creditors at negotiated rates. Things like valuable collections, second homes, recreational vehicles, or cash savings accounts may need to be surrendered if they exceed Texas exemption limits. It is the court's way of ensuring creditors get at least some payback before letting filers walk away debt-free. An attorney can help determine what assets are fair game and what is likely protected if you pursue this route.

Contact a Boerne, TX Bankruptcy Lawyer

When there are options to get out of financial trouble, you deserve to seek what may be available. Choosing which option can be overwhelming, but a San Antonio, TX bankruptcy attorney can help you. Call Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation.