May 11, 2023

Missouri Money Woes? Here's What You Need to Know About Bankruptcy vs Short Sale

Missouri is a state that has faced its fair share of financial troubles in recent years. With an unemployment rate of 4.4% and a poverty rate of 13.4%, many people are struggling to make ends meet. If you find yourself in a difficult financial situation, you may be wondering what your options are.

Two options that people often consider are bankruptcy and a short sale. Below, we compare the pros and cons of each option, as well as what factors to consider before making a decision. You’ll also learn how to sell your house to avoid bankruptcy in Missouri.

What is Bankruptcy?

Bankruptcy is a legal process that allows individuals to eliminate or restructure their debt. There are two types of bankruptcy that individuals can file for:

  • In Chapter 7 bankruptcy, most of your unsecured debt (such as credit card debt and medical bills) is discharged, meaning you are no longer responsible for paying it back.
  • In Chapter 13 bankruptcy, you create a repayment plan to pay back some or all of your debt over a period of three to five years.

Pros and Cons of Bankruptcy

As we mentioned earlier, there are pros and cons to filing for bankruptcy.


  • One advantage of bankruptcy is that it can provide immediate relief from debt collectors and creditor harassment.
  • Bankruptcy can help you keep your assets, such as your home and car, if you are able to make the payments on those debts.
  • It can discharge most of your unsecured debt, meaning you are no longer responsible for paying it back.


  • Bankruptcy can negatively impact your credit score for up to ten years, making it more difficult to obtain credit in the future.
  • Some debts, such as student loans and taxes, cannot be discharged in bankruptcy.
  • Filing for bankruptcy can be a complex and time-consuming process.

What is a Short Sale?

A short sale is when you sell your home for less than what you owe on your mortgage. This can be a good option if you are unable to make your mortgage payments and do not want to go through foreclosure. In a short sale, the lender agrees to accept less than what is owed on the mortgage in order to avoid the cost of foreclosure.

Pros and Cons of a Short Sale


  • One advantage of a short sale is that it can help you avoid foreclosure, which can have a significant negative impact on your credit score.
  • A short sale can be less time-consuming and less expensive than going through the foreclosure process.


  • You may still be responsible for paying the difference between what you owe on your mortgage and what the lender receives from the sale of your home.
  • A short sale can still negatively impact your credit score, although typically not as severely as foreclosure or bankruptcy.
  • Not all lenders will approve a short sale, and it can be a complex process that requires the assistance of a knowledgeable real estate agent.

Factors to Consider Before Choosing Bankruptcy or a Short Sale

Before choosing between bankruptcy and a short sale, there are several factors to consider.

Your Financial Situation

If you have a lot of unsecured debt, such as credit card debt and medical bills, bankruptcy may be a better option for you. On the other hand, if your primary concern is keeping your home, a short sale may be a better option.

Your Credit Score

If you have a good credit score and are concerned about maintaining it, a short sale may be a better option than bankruptcy. However, if your credit score is already low and you are struggling to make payments on your debts, bankruptcy may be the best option for you.

Long-Term Financial Impact

Consider the long-term impact of each option. Bankruptcy can have a significant negative impact on your credit score for up to ten years, while a short sale may have a less severe impact. However, a short sale may result in you still owing money to your lender, while bankruptcy can discharge most of your unsecured debt.

If you are facing financial difficulties in Missouri, it is important to explore all of your options before making a decision. Bankruptcy and a short sale are two options to consider, but it is important to weigh the pros and cons of each option and to consider your unique financial situation.

Whether you choose to file for bankruptcy, pursue a short sale, or sell your home, it is important to work with experienced professionals who can guide you through the process and help you make the best decision for your financial future.

Sell Your House Fast in Kansas City, Missouri

If you need to sell your house fast but don’t want the hassle of a traditional home sale, contact KC Cash Closing. We buy houses as-is. No repairs are needed. Avoid closing costs and realtor commissions. Close in as little as seven days. Call 816-659-2259 to get a fast cash offer from our local home buyers in Missouri.

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