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foreclosure vs chapter7 california?

'm 25yrs old, have zero credit card debt, no student loans just my house that has just received a notice of default. Which would have a greater impact on my credit score a foreclosure or chapter 7 bankruptcy filing? I know a bankruptcy lasts about 7 years but how long does a foreclosure last, or better yet how soon can I buy a house after foreclosure? I'm fairly certain that a bankruptcy would be worse but i'm concerned that my lender might try or has the option to get a deficiency judgment since I refinanced a year ago. From what I understand the lender has two options (California Law) a private sale or judicial proceeding. I'm hoping for a private sale which will pretty much keep me in the clear. How often do lenders go with a judicial proceeding? Let me reiterate: Which would have a greater impact on my credit score a foreclosure or chapter 7? How long does a foreclosure last? How often do lenders go with a judicial proceeding? Will there be any tax liabilities? loan is about 450k, homes are now selling for 300k in my area, will the difference be taxed as income If the lender goes with a private sale?

Public Comments

1. Both will have significant impact. You said that the Notice of Default was already filed, so I suspect that you are at least 90-120 days down on your mortgage payments. Most of the damage has already been done to your credit report with those late pays. An additional notation of "Foreclosure" will lower your score, but not that much more. The foreclosure will stay on your credit report for 7 years. You will be able to get an FHA mortgage in 3 years and a FNMA mortgage in 5 years. It does not appear to me that you will need a bankruptcy. It will create a "Public Record" on your credit report which will stay there for 10 years and will lower your credit score even further. If you file bankruptcy you will still have a foreclosure and will be subject to the guidelines above. Chances are very slim that the lender will pursue a Judicial Foreclosure. They have a "Power of Sale" clause in the Deed of Trust which is what they used to hit you with the Notice of Default. So unless they stop the process and switch to the Judicial Foreclosure you have nothing to worry about. If by some strange chance they do switch to the Judicial Foreclosure, wait until they get the deficiency judgment and then file the bankruptcy. No need to do it before then. Mr. Financial Freedom http://www.5stepstofinancialfreedom.com