Short Sale VS Default or Settle Credit Cards -- Which is Best Option?

MyOwnFault

The Question:

Is it better to do a short sale & stay current on all my credit card payments OR is it better to default/ settle on a couple credit cards and stay in good standing with my mortgage?

The Background Info:

I put myself in this position, so nobody to blame but me. I want to stop the madness and fix this, but want to make sure I take the smartest path to do so.

I am current on all my debt payments as of right now, but will not be able to sustain that for much longer.

I tried to sell our house, but the only way to sell it was to bring more money to the table than I have. I am beginning to consider a short sale -- but before I do this I wanted to find out if this was a better option than to pinpoint 2 - 3 of my unsecured debt credit cards and let those go into default.

The Bottom Line:

I am currently at the point where I have to pick a path or this is all going to unravel and get bad across the board. I would like to minimize the damage & fulfill my debt obligations to as many as possible. I need to do something soon to be able to do this.

Please help -- thanks!

immoral_angeluk

What do you mean by short sale?

david_hellier

Same question.

MyOwnFault

Thank you for your quick replies -- sorry if I was not clear on the situation.

Short Sale -- An arrangement with the bank/lender where you can sell your house for less than you owe. It is better than a foreclosure obviously, but still has a negative impact on your credit. There are much better explanations of it from experts in this field (Google "Short Sale" and you can get the full definition).

I hope that clears up that & will allow people to understand the options A vs B scenario that I am trying to figure out.

Thanks

Wicca303

If your other debts are unsecured (ie. Credit cards) it would be better to default them and keep up with your mortgage. If you phone the cc companies, they may let you negotiate a better rate/lower repayment/etc. If it means getting their money. This is more likely if you speak to them before you miss a payment. Explain the rough situation and why you can't manage the payments. They might be more understanding than you think.

I definitely wouldn't lose the house for cc debt though.

I'm sure someone else with better/more knowledge than me will be along soon. Maybe tomorrow.

Good luck.

MyOwnFault

Thank you for your response.

As I mentioned, I am currently not behind on ANY of the payments to either (house OR credit cards) but can see that something is going to have to give soon or all of them will be affected. I would rather be targeted about my losses/negative effect ...so trying to choose between Short Sale (house) or Default/ Settle Credit Cards.

One of them has to go in order to not continue to take on more debt & to pay down existing debt.

Thanks again & I appreciate any advice from professionals or others who have already encountered this either-or decision.

BabyBetty

Honestly and truly it is better to let the credit cards go and keep your house if you can. Either way you are going to have a ding on your credit if you do a short sale or default on your credit cards.

You sound as though you are in the states, I would suggest that you listen to the Dave Ramsey show (Fox TV) or pick him up on one of the radio stations that carry him.

With the credit cards if you go into default there is a chance they will accept less than the amount owed depending how far you get behind.

My advice in a nutshell is to keep up payments on your house and not go into foreclosure if you can help. If you have to resort to a short sale don't do it at the expense of keeping up with the credit cards.

Also check out Dave Ramsey as he is phenomenal on this type of advice.

BB