http://www.smartmoney.com/personal-finance/real-estate/sizing-up-a-short-sale/

RISMEDIA, June 30, 2009-(MCT)-Question: How long will a foreclosure or bankruptcy show up on your credit report?

Answer: A foreclosure can be reported on your credit report for seven years from the date the foreclosure was filed in the court, according to Gerri Detweiler, author of “Reduce Debt, Reduce Stress.” The book is $14.95, and an ebook is available at www.ReduceDebtReduceStress.com.

Bankruptcy, she said, legally can remain for 10 years from the date you filed - not the date of discharge or when the bankruptcy is completed. However, credit reporting agencies have agreed to voluntarily remove completed Chapter 13 filings - where someone pays off part or all of their debt under a court-supervised plan - seven years from the date of filing.

The idea is to give consumers some credit for having paid back as much of their debt as they could afford to pay back.

What happens with a short sale? Or an arrangement in which the lender allows the homeowner to sell the home for less than the mortgage due? Detweiler noted that a short sale may either be listed as a charge-off or a debt settled for less than the full balance. Both remain on your credit report for seven years from the date that action occurred.

©2009, Detroit Free Press.
Distributed by McClatchy-Tribune Information Services.

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http://rismedia.com/2009-06-29/how-long-will-a-foreclosure-or-bankruptcy-affect-credit/#ixzz0KVmCxdJe&D

The link is for an article written by Sid Kirchheimer, author of Scam-Proof Your Life, published by AARP Books/Sterling.  One thing to focus on from this article, is in the sectoin about KNOW THE REALITIES, and it says that "under federal law, debt remains in a credit report for about seven years; bankruptcies stay listed for 10 years.  And it's illegal in many states to accept an advance payment for any debt-adjusting service".

http://bulletin.aarp.org/yourmoney/scamalert/articles/credit_repair_s_dirty_business_.html

Alternatives to Foreclosure

You may be facing foreclosure…so what are your options?!? Try to look at the situation more from a financial standpoint rather than an emotional standpoint. This way you can more successfully analyze which option might best suit your needs and desires to move you towards resolving your financial difficulty. One very important thing to remember: Time is of the essence. Take time to think through your situation and make a decision. Then, take action right away so you have enough time to complete the solution you choose.

Options When Facing Foreclosure

1.      Do Nothing – If a homeowner does nothing, they most likely will lose their home at foreclosure auction.  Loan applications generally ask if the applicant has ever been foreclosed upon. Credit reports also disclose this damaging information. Not the best option.

2.      Payoff/Refinance – Completely paying off the entire loan amount plus any default amount and fees. Usually this is accomplished through a refinance of the debt. New debt is at a normally higher interest rate and there may be a prepayment penalty because of the recent default. With this option, there should be equity in the home.

3.      Reinstatement- Pay the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.

4.      Loan Modification – Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan. This may allow the homeowner to catch up at a more affordable level. To qualify, you must prove to the lender you have fixed the problem that caused the late payment.

5.      Forbearance – Lender may be able to arrange a repayment plan based on the homeowner’s financial situation. The lender may even be able to provide a temporary payment reduction or suspension of payments. Information will be required from the lender to show that you are able to meet the new payment plan requirements.

6.      Partial Claim – A loan from the lender for a 2^nd loan to include back payments, costs and fees.

7.      Deed in Lieu of Foreclosure – Give the property back to the bank instead of the bank foreclosing. Banks generally require the home be well maintained, all mortgage payment and taxes must be current. Most loan applications ask if this has ever happened.

8.      Bankruptcy – This option can liquidate debt and/or allow more time. I can refer you to a qualified bankruptcy attorney.

 --Chapter 7    (Liquidation) To completely settle personal debt.

 --Chapter 13  (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-5 years.

 --Chapter 11  (Business Reorganization) A business debt solution.

9.      Sale – If the property has equity (money left over after all loans and monetary encumbrances are paid).  The homeowner may sell the home without lender approval through a conventional home sale. In this case, the homeowner will get cash from the sale.

10.  Short Sale – Also known as a pre-foreclosure sale, can be negotiated with your lender by your Real Estate Professional if what is owed is MORE than the property’s value. You receive NO MONEY.

I have read this form and understand that I have several options available to me and that there may be more than those listed above. I have been advised that I should consult an Attorney and CPA.  I have chosen to use Bob & Rita Driver of Re/Max All Stars to assist me in negotiating the short sale of my home.

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 Name                                                                                                                      Date                  ________________________________________________________      ___________         

 Name                                                                                                                      Date

The Driver Team

Bob & Rita Driver

2845 N. Houston Levee, Suite 103

Memphis, TN 38016

901-387-1199

901-387-1070