In this horrible time of economic crisis, there are new ways to prevent the ever present loom of bankruptcies and foreclosures. It's called a SHORT SALE and it can pretty much save your credit thanks to a new bill that the former President Bush signed last summer. This guide will give you something new to consider instead of resorting to filing for bankruptcy or allowing the bank to foreclose on your home.

In laymans terms, a short sale is when you list your home for sale (with a realtor who is educated in short sales-- most are but be sure to ask your realtor first that they know how to do this before you agree to have that realtor sell your home for you). But instead of the full loan amount, you are able to sell your home faster by having the lender take less than the loan amount owed. This is called a short sale and thanks to Bush there are no credit reprocussions when your home sells in a short sale (keep in mind that your credit is affected by anything that has happened prior to the short sale though!).

Also keep in mind that not all lenders will accept a short sale or discounted payoffs, especially if it makes more sense financially for them to foreclose. But, you will find that MANY lenders will allow a  short sale because it's a guaaranteed sale unlike a foreclosure. The lenders who allow short sales know that when the home does sell they are guarranteed some money and usually it's more then they would get if they were to foreclose.

Also, thanks to the Debt Forgiveness Relief Act that Bush signed in December 2007,  any short sale made (from Dec. 2007-2012) is now not considered to be taxable income but this all depends on your actual lending institution and a few other factors. That means that if your home were to sell in a short sale, come tax time the sale amount of the home is not taxable by the goverment.

For more detailed information, please visit this link: www(dot)irs(dot)gov/pub/irs-pdf/p4681(dot)pdf

If you want to try a more credit forgiving method of getting out of that home loan you cannot afford (instead of filing for bankruptcy or allowing it to be foreclosed) then call your local real estate agent today and ask what a Short Term Sale on your home can do for you. It's definately a 3rd option that many people aren't even aware of.

When going through a divorce my husband and I thought foreclosure was our only option until a very helpful real estate agent told us about doing a short sale. We listed our home for sale in June 2008 and it sold in January 2009. We found out that there was no tax liability and it saved the worsening of our credit that a bankruptcy or foreclosure would have surely meant. Short Sales are not right for everyone but it could be right for you.

If you found this guide to be at all helpful, please vote YES below. Thank you for your time and be sure to check out another one of my many informative guides here on eBay.