which is worse on A credit report bankruptcy of forclosure?

Question

I know a bankruptcy stays on for 10 years how long does a forclosure stay on? I do plan to buy another house soon,(downsizing as my income has changed) I do not have A bk or forclosure right now but may have soon if my house does not sell in the next 2 months. ANY advice would be very welcome.
The home I am trying to sell is in phoenix AZ and the market here is flooded with homes for sale right now, I cannot afford to wait for the market to turn around so I need to do something NOW, I would even sign the house over to someone-just take over payments! so I can save my good credit.

Answer 1

It's a catch 22 situation. Depending on what type of credit you're applying for. If you're looking to purchase a home, then the foreclosure is worse then the bankruptcy. If you are looking for credit card, auto loans, etc, then the bankruptcy would most likely be worse. A foreclosure stays on your credit for 7 years while a bankruptcy stays on 10.

In CA we have an overabundance of homes for sale as well. I have a realtor I work with that has given very useful advice to my clients when they listed their house. In fact, in a market where homes are on the market easily 3-6 months, his advice sold her house in a week. He said you have to look and see what has recently sold like your home and then bump up the seller's commission an additional 1-2%. Therefore offering the seller 4-5% in commission if the home sells. It's cheaper then dropping the home thousands of dollars and most agents are hurting for money and this will entice them to get an offer on your home. Give it a shot and see if it sells your home, you have nothing to lose by it. By pricing is a crucial element in selling a home in this market.

I hope you do not have to file bankruptcy or go into foreclosure. Could you rent the house out for enough to cover your payments? What about refinancing it into a lower payment?

I'd be happy to discuss options with you if you want. Just email me. Good luck in your situation.

Answer 2

If you have a foreclosure they will not likely loan you money for another home for quite a while. A bankruptcy is very bad (and the rest of your life they will ask on credit applications "have you EVER declared bankruptcy"..and you will have to answer the truth or face bank fraud charges so don't buy into the 7 or 10 year limit). But to a mortgage company they are much more likely to loan you money to buy a house with a bankruptcy rather than a foreclosure because you could have another foreclosure right away but you can't have a bankruptcy for seven more years.

If you can't do anything else-call the mortgage company and explain that things are hopeless. If they believe you they may allow a "deed in lieu of foreclosure" and that may be your very best bet.

Answer 3

I'll argue the conventional "wisdom" on this. I feel that the foreclosure is more damaging for many people. Here's why:

Although both will affect your credit rating and the BK will remain there for a longer period of time, once you have been discharged through BK you have no unsecured debt and may well be able to keep your home and one or more cars. With a FC, you lose your home outright. Period.

Since you have no unsecured debt, you may find it much easier to make your mortgage payments, further enhancing the chance that you will be able to keep your home if you don't take on any new debt.

Further, once you have been discharged through BK, you can't file again for 7 years. Getting credit after a BK isn't all that hard for most folks as the creditors KNOW that they'll have plenty of time to get their $$$ because of the 7 year bar on filing again. Credit will cost you more, to be sure, but it is out there. For that reason, be VERY careful about taking on any new debt as you could lose your home if you can't meet the mortgage after you take on the added debt. Getting credit of any type after a FC is nearly impossible for a while, especially for unsecured debt. Lenders see you as a risk that could file BK if your finances don't improve so they will be extremely wary of doing business with you.

If I were in the situation of having to choose between FC and BK, I'd probably go with the BK since I'd be able to keep my home. This assumes of course that I would have enough cash available to meet the mortgage payments once the BK was discharged. This would be especially true with the amount of equity that I now have in my home, around 45%. Losing that much equity to a FC would be more devastating to me than a BK in the long run.

Answer 4

My opinion is that bankruptcy is the worse of the two. It stays on your credit for 10 years vs. 7 for a foreclosure. A bankruptcy affects all your credit items, the foreclosure only one. New creditors may be more willing to forgive a foreclosure if you remain current on all other bills than when looking at someone who has gotten out of all their bills.

Answer 5

Overall, a bankruptcy is worse because it typically means you have derogatory information an several accounts. However a foreclosure is most damaging if you are trying for a home loan.

I have ties to Phoenix. Where is your home and what are you asking for it?

Answer 6

Foreclosure is the worse of the two for it terminates or cuts off the right to property where bankruptcy allows the debtor to start anew with property they are allowed to retain as exempted from their liabilities,unhampered by pressure and discouragement of preexisting depts.

Answer 7

Bankruptcy. It will haunt you for over 10 years......... But do what you feel is best............... If they foreclose, they will sell it and can make you pay the balance. if you file bankruptcy they cant......................

Answer 8

amen gl im feeling this crap too, im in south florida and my homes brand new 2yrs and still hasnt sold. for me thou im willing to work 3 gdam jobs to get what its worth and wont be settling.