I don't think there's anyone in the US that hasn't heard what happened to the real estate market back in 2007. Since that time we have seen many Americans losing their homes to foreclosure and many of those same folks filing bankruptcy to eliminate debt and liabilities that come along with a foreclosure. When the real estate market came crashing down, the government stepped in with a loan modification program that was intended to fix everything. Just like every other government program, it had mixed results with the majority of them being a failure. After the program began it became apparent that only about 5% of those Americans that applied for the program were given a loan modification. The rest of them were given letters from their lenders telling them to catch up on their payments or foreclosure was in the near future. Some of these raced to the bankruptcy attorney to see if filing bankruptcy would stop foreclosure. For some it was too late, while others caught it in time and were able to work something out.
Cincinnati Bankruptcy Lawyer, Bankruptcy Chapter 7, Bankruptcy Chapter 11,
During all this time, something interesting happened in the real estate market. Many lenders started accepting less than what was owed on the house for full payment. This was called a short sale. Many people jumped on this believing that a short sale would keep them from having to file for bankruptcy and losing their homes to foreclosure. Everyone thought it was a win-win for the real estate market. My grandmother always said, "When something looks too good to be true, it's probably too good to be true." This is when the arguments from realtors in favor of short selling homes came out. First, it was not a foreclosure, meaning the person will have a foreclosure on their credit report. Next, because of the previous reason, since the foreclosure doesn't show up on the credit report, their credit would not be damaged. Lastly, was basically a lie. Most people were told that there was no liability from a short sale to the bank. Many realtors believed that since the house was not foreclosed on there is no loss. From the bank point of view, what about that deficiency on the loan? To the normal Joe that is uneducated in financial matters that seemed like a no-brainer.
When it comes down to it, most of the mistruths are nothing more than a bunch of hogwash. In reality, when looking at a credit report, a short sale can cause is just about as much damage as a foreclosure. It's no different than debt settlement companies promising their customers that their credit won't be damaged like it would for someone filing bankruptcy. A debt settlement and a bankruptcy filing carry about the same weight on a credit report. The biggest lie of all that can destroy an individual after a short sale is saying that the lender has no right to collect on the deficiency of a short sale. The truth is, it depends solely on the lender of whether or not they want to pursue legal action against the debtor after the short sale. Legally, they can go after that deficiency at whatever costs they incurred to resell the property. In today's market, this could be devastating to an individual after going through the entire process. And if they don't pursue the deficiency, they could send a 1099C to the individual for taxable income for that same deficiency. Either way it could possibly be financially devastating for the person.
This is why we only way that someone could be guaranteed of the outcome is filing bankruptcy. A bankruptcy attorney will include the home in the bankruptcy filing whether it was surrendered in a Chapter 7 or Chapter 13. If the house is included when filing bankruptcy, all liability will be wiped out in the bankruptcy discharge. This will make sure that the lender can't come back later and ask for something from the debtor. Before making the decision to short sell a property or even surrender the home in foreclosure, a person should consult a bankruptcy attorney and learn the pros and cons of all the different procedures.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
Rating of Bankruptcy Lawyers Phoenix
Get Online Application at online Bankruptcy Lawyer.
0 comments:
Post a Comment