The economy recession that America is trying to overcome at the moment triggered credit and banking crisis, the loss of equity in housing, dropped corporate earnings. All this quite predictably causes mass layoffs in several industries. Even the most seem to be “recession proof” sectors have to cut significant amounts of the positions.

Auto and airline industries were the first to feel the consequences of the crisis after the inflation in fuel and other energy costs. But nearly no industry managed to walk away from the recession. Daimler Chrysler, Pepsi, Coca-Cola, Phillips, Supervalu, Starbucks, Yahoo, General Electric, Xerox, Bank of America, Citigroup, numerous airlines – a short list of corporations that have to lay off their workers.

The current unemployment rate has reached 6.1%. And, according to financial experts’ forecasts, it will keep on growing.
Even more people can lose their jobs. The results of a recent survey conducted by Workplace Options show that about 50% of US employees are afraid to get laid off. What about you? Are you one of them? Or are you on the other side?

Say, you have become a victim of a mass layoff, caused by the crisis. You have a wife and kids. Your wife is a full-time housewife. You have credit cards – reward cards with pretty high APR, or low interest cards – doesn’t matter. Anyway you carry balances you are to pay off. You have mortgage bills to pay. You’ve got a car loan. You have been trying hard to find a good steady job with decent salary for the past three months. And you are still unemployed. The bills keep piling up. You are about to give up. But suddenly you get a job offer from another state. What would you do in a situation like this?

This is what credit experts advise in a situation like this.

If you realize that staying here in the status of an unemployed or getting a low-paid job is no option for you, you should move on with your life. Especially, if life gives you a good chance. The only thing that holds you back is your mortgage. What you need to do is to get out from under your mortgage.

Short sale is a smart move to make. A short sale is when the profits from your home sale fall short of the balance you owe to your lender. If you manage to convince the lender to come to terms with you, on the condition that the creditor accepts the amount of money less than the loan balance you owe.

You should negotiate the deal with a bank’s loss mitigation department. If the lender agrees, you sell your home, at a price less that your outstanding mortgage loan balance and give the proceeds (as a payment in full) to the lender. After most short sales deals leave a deficiency balance you will still be liable. But you will not be tied with your mortgage anymore.

You wonder why a bank would go along with that. Mind that this option is available for those who experiences financial hardships. Or this kind of a suggestion can be considered under some exceptional circumstances, like a critical situation on the housing market. The bank loses pretty much profit, having agreed to this type of deal. But if the lender realizes that they will not get more proceeds through a foreclosure case, they will most likely agree to a short sale.

A short sale will help you minimize the negative effects on your credit report. So, once you are determined to start over, do not be afraid to make a life-changing decision.

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