Another option is a short-sale of your home. In brief a “short-sale” is when you and the lien holders agree to sell your home for less than you currently owe on it. There are many benefits and consequences to this type of arrangement. These have become increasingly more popular recently, but only you can decide if this is the right option for you. Many times the IRS considers the amount of money forgiven by the lien holder as “income for tax purposes” which could cause you to pay more income taxes. This is outside my area of expertise and I recommend you consult with your tax advisor before committing to this option. However
Per Jim Wasserman at the Sacramento Bee,
"Typically the state and federal governments view forgiven home loan debt as additional income and tax it. But both have backed off amid the housing crash. The federal government has suspended takes on forgiven mortgage debt from 2007 through 2012. California suspended it for the 2007 and 2008 tax years. But disagreements over the business tax refunds stalled a bill extending it to 2009. The Bill being considered this week (06 April 2010), Senate Bill 401, would cancel state tax obligations for forgiven mortgage debt through the 2012 tax year. "
Bankruptcy is another option that carries with it many benefits and consequences. This is a court action and is best handled with the advice of a professional attorney who specializes in this area of law. These attorneys can often aid you in negotiating with lenders who aren’t willing to negotiate with you.
Which option is best for you depends on your specific situation. I am happy to meet with you and offer my opinion on how best to proceed based your circumstances. Should you need a referral to a different professional I am happy to help with that as well. Give me a call at (805) 216-7902 or drop me an e-mail at Jared@CamarilloQualityHomes.com.
There are lots of different home sellers in the world of Realestate. These tough economic times have brought back a term that most of us hoped was gone forever, “distressed sellers”. Home sellers become distressed for a variety of reasons and often due to circumstances beyond their control.
I am not an attorney and nothing I say, write, print, or post, should ever be considered as legal advice or used in place of the sound legal advice you receive from professional attorneys. Having said that, there are many ways to approach financial difficulties.
One of the most important things is to be proactive and recognize the problem quickly and approach it head on. This means don’t ignore bills as they come in just because they are more than you can afford, communicate directly with the creditor early and try to make arangements. A habit to avoid is using Credit Cards to pay for other bills that are coming due. The same is true for “Pay Day Loans”, I avoid them at all cost and hope you do as well.
There a lot of organizations out there that will negotiate with your creditors for you. Some of these services can be a real blessing to someone in financial distress and some of them can bring more heart ache. Just like you are checking me out right now, it is wise to check out these companies before you use any of them.