Question about filing Ch.7 with foreclosure

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We are filing on Dec 1st for ch 7 BK. We are trying to do a short sale on our house, but the agent and her investor are taking their sweet time...The lawyer wants us to just add it in as a foreclosure, but I have heard that it's ten times worse to have a BK and a foreclosure. Is this true? What makes it worse? Is it harder to rent, or just harder to buy a house in years to come?

Thanks for any input.

[HeatherB]

If you think you may lose your house anyway, then it will be better to give your house up IN bankruptcy. If there is no threat of losing your house, then by all means, try to keep it and sell it.

I think it is 10 times worse if you file bK..... then have a forclosure 6 months later. Like tearing off a bandaid, if you must lose your house, better to have one big mark on your credit file than 2 big marks. 'Least, that's what I've been told.

[lrprn]

...if you must lose your house, better to have one big mark on your credit file than 2 big marks. 'Least, that's what I've been told.

Heather is right.

And even if the short sale happens, you will then run into the IRS hitting you up with a 1099 to pay taxes on the difference between your loan(s) and the short sell price before you file.

If you really can't afford the house if it doesn't sell, then it's a no brainer to include it in your bankruptcy and let it go back to the lender leaving you owing nothing. This is not a time to be worrying about your credit worthiness - you are filing bankruptcy. After about 2 years if you let the house go in the bankruptcy, lenders will start looking at you more favorably again. And if after 24 months post bk, you hit the housing market with 20% down, they won't care what happened to you earlier

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I see what you mean. The lawyer said that we would be considered insolvent and wouldn't owe taxes, but now I'm getting a little worried....I'm going to talk to him about this, thanks for the explanation.

[lrprn]

I see what you mean. The lawyer said that we would be considered insolvent and wouldn't owe taxes, but now I'm getting a little worried....I'm going to talk to him about this, thanks for the explanation.

Your lawyer is right - whatever you owe on a 1099 after a short sale will be wiped out once you file. Should have added that.