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If my house goes into foreclosure will the banks or the tax people come after me for money? How long will this effect my credit

Phoenix, AZ |

I live and work overseas for the US government the house is in my name but it was for my son and now he cant make the payments.

I dont plan on living in the US and therefore I dont want to keep the house and I cant afford to make the payments. How will this effect me working for the government?

Attorney Answers 2


This message is intended for educational purpose and should not be used to replace the counsel of an Attorney licensed in the state of the questioner. In Illinois as in many other states the Lender will first foreclose on your property and if you do not defend yourself, which is risky, they will have your house sold at an auction and in the event that the home will sell for less than what was in fact owed to the Lender, the Lender may request a deficiency judgment. They have years, in most instances, 10 years to attempt to collect on said judgment. What is wise to do is put up a foreclosure defense and attempt to enforce your rights against the Lender. In the event you are not trying to save the home for yourself, attempt a negotiation whereby you give a deed in lieu foreclosure to the Lender guaranteeing that there will be no deficiency judgment. In your situation I would hire an Attorney and a reputable Realtor to attempt either a short sale or a Deed In Lieu of Foreclosure. If either one of these procedures is done precisely and correctly you will not have to worry about a deficiency judgment from the Lender. As far as taxes are concerned, I would highly recommend you speak to a licensed CPA in your state. The one hundred to 200 hundred dollars they may charge for a tax consultation is well worth it. Please check with your local bar association for qualified counsel who could direct you to the right Attorney. Visit for more information. Please consult local counsel to verify the applicability of the above information in your state. Please tell me if this was helpful to you at all. Please do your research, the best kind of Client is the one who takes the time to get informed. No Attorney, Doctor, CPA, etc. is perfect, but informed Clients will always help get closer to the goal.

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Arizona has two anti-deficiency statutes, A.R.S. § 33-729(A) and 33-814(G), that may, under certain circumstances, prevent lenders from pursuing borrowers when the property is foreclosed. There are certain criteria that must be met (under 2 1/2 acres, used for residential purposes, etc.) before the borrower is safe. Whether these statutes are applicable to your situation and whether the property qualifies can be complicated. You should speak with an attorney familiar with Arizona property laws.

As for the tax man, you should get a copy of Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. This explains the tax implications regarding properties foreclosed and sold for less than the loan value. Generally, many taxpayers can currently escape tax consequences on these types of sales.

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