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In spite of the fact that many individuals in Florida are seeing the value of their homes rise, 27 percent of homeowners in the state and across the country nevertheless owed more on their home than it was worth by the end of 2012, according to a recent report from Zillow. While people may find numerous ways to stop foreclosure on their homes, it can be difficult for them to determine which path is actually the best one for their situation. Further, there are many misconceptions about how short sales and bankruptcy work that may have dire consequences for the uninformed.

Some homeowners shy away from short sales because they believe it will end up costing them money. However, the reality is that the lender often ends up taking the role of the seller, and most if not all closing costs are taken care of by the lender. There are even programs that will give cash to the homeowner for participating in a short sale.

Similarly, many people believe that filing for bankruptcy will save their homes from foreclosure, but the reality is that it will often simply delay the process. When individuals file for bankruptcy, banks can still retake the homes during or after the filing. This is because while bankruptcy changes loans into non-recourse loans, meaning that a lender cannot sue someone for what they are owed, a lien on a property for a loan still exists.

People facing foreclosure do have options, but figuring out the one best for their situation is not often easy. A bankruptcy attorney may help guide homeowners through the bankruptcy filing process and provide counsel for dealing with the banks.

Source: AZ Daily Sun, “4 myths that can hurt underwater homeowners,” Marilyn Kalfus, March 17, 2013