Short Sale vs Chapter 13

In a declining housing market, the value of a home sometimes falls below what is owed on  
it. When you can no longer pay the amount owed, you may go for a short sale - a sale in       
which the proceeds fall short of what you owe. But since you're asking lender to accept      
less money than you promised to pay, there is no guarantee that they will accept such a      
sale.

For a short sale, you must find a buyer willing to purchase your house at market value.        
This market value can be determined by a formal appraisal. Though this process avoids      
the negative affect of foreclosure on your credit report, you may still face a tax liability on   
the amount of debt forgiven.

And, if you have a regular income, Chapter 13 may allow you to keep the property that you   
might otherwise lose. In Chapter 13, the court approves a repayment plan that allows you   
to use your income towards the payment of your debts during a 3 to 5 year period, rather    
than surrendering the property. After you have made all the payments under the plan, you  
receive a discharge of certain debts.

Now, it is up to you to decide which option is best suited to you. For guidance, you can        
take the help of a lawyer and may consult with him.

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