I’m Going for a Short Sale. I’ve Jumped Off My Fiscal Cliff. – Linda

“Dear Steve,

I very unexpectedly have been out of work for eight months now. I am unable to make the mortgage payments on a house with interest rate of 6.625%. The mortgage company, a very large Federal Credit Union has refused to refinance–per their VP, they never benefited from TARP and are not required to refinance. I could make the payments with interest rate of 4% (which is generous on my end). I have now stopped making mortgage payments all together for three months–please know that I have been with this company Grow Financial for 21 years with never a missed or late payment and my credit score is 792. I now have the house up for short sale–I will be about $40K short. I have no other outstanding bills except for a car loan which I plan to change for a cheaper car.

What happens to me after the short sale. I know my credit will take a hit–I am told it will go down by about 200 points. Will I still be able to live with credit cards, will I be required to pay for everything with cash,groceries, clothes etc? How long will it take to recover a decent credit score? I would like to get a better idea of where this is headed as I feel as if I have jumped off my fiscal cliff and have no idea where this will land!!



Dear Linda,

As long as the credit union has agreed to NOT pursue any balance due from the short sale then you will be fine.

Actually, the short sale will not be a big deal in the long run. Yes, your credit will take a hit but with some time and continued good use of your current credit cards it will rebound. And you will be able to use credit, get a car loan and in a few years you will be able to get a new mortgage again.

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I know it feels like you are jumping off a cliff but the reality is in the grand scheme of things it’s just a little hop.

My advice is to check the short sale deal with the credit union, stop worrying if possible, focus on reemployment and when you land that new job, come back and let’s focus on rebuilding your financial life.

I think you will be fine in the long run.

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
Damon Day - Pro Debt Coach

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