At first glance, it would appear that there is no point in doing a short sale in Portland, Vancouver or anywhere else for that matter after filing a Chapter 7 Bankruptcy. After all, the bankruptcy discharge eliminates the debt owed on the house. There are, however,  some reasons why Oregon and Washington debtors might want to at least tentatively pursue a short sale after their cases are filed.

First, under Freddie Mac and Fannie Mae guidelines there are a different waiting periods for corresponding derogatory credit events. Under current guidelines, the waiting period to purchase after a chapter 7 discharge is two years. After a short sale, the waiting period is likewise two years. The waiting period for a foreclosure, however, is a full seven years.

These guidelines are not set in stone and a demonstration of extenuating circumstances regarding any any of these derogatory credit events can enable a debtor to get a new mortgage much sooner. The fact is that doing a short sale rather than going through foreclosure allows the debtor to avoid having uncomfortable conversations with prospective lenders after two years rather than seven.

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