property in NY and live in SC
It depends. If you file a Chapter 13 before the home goes to sale at auction (in Michigan) the foreclosure is stopped and you can cure the arrearage by paying the amount over 60 months, provided you meet the Chapter 13 requirements. A Chapter 7 will not stop the foreclosure but has the benefit of discharging the obligation so you can't be held liable for the deficiency (difference between the foreclosure price and the debt owed) if the lender pursues you in a deficiency state. We like to combine Chapter 7, as well as Chapter 13's with loan modifications - in an effort to retain the home and lower the payment on the principal, interest, taxes and insurance - when that is the smart play. If the house has not gone to sale, you have many options and you should meet with attorneys that know the bankruptcy and loan modification process in order to make the best of a stressful situation.See question
We are underwater 50K on rental property and it is a constant drain on our life. Keeping it rented for what we owe and bad renters make it too much to handle. Hired an agent 6 months ago to execute short-sale but bank denied it (and DIL) saying we...
If you're going to do a Short Sale, an attorney that knows the process is a great benefit for two key reasons. First (which would have helped you) is that before the process begins, the attorney that knows the relevant guidelines of the lender or Fannie or Freddie, will assist in planning so that you fit within the guidelines (if that can be accomplished) or you don't begin the process. The second reason is that once a buyer is obtained, the attorney's role is to play hard ball with the lender, the buyer and the brokers - often times squeezing everyone so that there is enough cash out of the sale to gain the release for the Seller (his client). When the broker is handling the short sale, he (she) is too vested in the closing and is therefore not in a position to push as hard as it sometimes takes. In your situation now, an analysis is needed to see if you can start the process over or appeal the determination and fit within the parameters - otherwise you need plan B. Plan B - does include a possible Chapter 13 - or alternatively, wait for the foreclosure process to go forward and then if the lender pursues the deficiency, either settle then or potentially use Chapter 13 (or sometimes 7) to address the debt. To make this decision, you current income, future income, asset holdings, nature of employment (self employed versus W2 wages) all need to be assessed. Final point - keep in mind that so far Congress has not extended the Cancellation of Indebtedness Exemption on Principal Residences that expired 12/31/13. Most of us believe it will happen, but if it doesn't there can be adverse tax consequences on the short sale - such that foreclosure could be the better result. After reading this, the answer to the question of "Should i hire an attorney" should be self evident. But to be clear - Yes, just make sure its a good one! Good luck.See question
I will be in a position to offer cash settlements and would like to know how to do it!
Step One is to make sure this is the least costly method of addressing the debt and that you do not have any need for short term credit. If you do, that should be completed first (i.e. lease or buy a car). Settling debt on your own can be done - but you are handicapping your ability because you will not be able to assess whether the deal is within the optimal range of acceptability. We resolve debt by refusing to pay and settling at the point of charge off or even after it is referred to legal by the creditor. The key is to make the best deal you can just before the case goes to legal - but you cannot find that out from the creditor. As attorneys, we defend the case if you are sued and utilize the discover process to persuade the creditor to settle rather incur the cost and inconvenience of the litigation. You should, at all costs, avoid the "debt settlement companies." They settle for too high a amount, do not defend the cases (they are not attorneys) and they overcharge (typically 15-18% of the debt, plus monthly fees). In contrast, we charge a flat fee of 7.5% of the debt and defend any cases that occur. I'm telling this so you can assess the range of options. Two additional points - you need to assess tax consequences that attach to the cancelled debt - you will receive 1099-C's from the creditors and unless you fit within the "Insolvency Exception" the cancelled debt is taxable. For some, this can result in converting dischargeable credit card debt to non-dischargeable tax debt - a big mistake. Secondly - if you try this on your own (which you should not) just remember that you should not believe anything that the collectors say. They will tell you that every deal is the "Best and Only Offer" and they are not telling the truth. Good luck.See question
the place of the HELOC since my condo is under water. I just received a letter from Bank of America that my HELOC principal was foregiven as a result of Dept. of Justice and state attorney general's global settlement to major mortgage servicers i...
There are three ways you can exclude the cancelled debt from income: First, if the mortgage debt was used for the purchase or improvement of the home, then under the Debt Relief Act (which presently expires on 12-31-12), the Cancellation of Indebtedness Income arising from the Bank's actions can be excluded from ordinary income. If, however, the HELOC proceeds were used for other purposes, then the exclusion only applies to portion applicable to improvement/purchase of the home. The second exclusion is the Insolvency Test - which provides to the extent you are insolvent prior to the cancellation and after the cancellation of debt the income is excluded. If, however, the cancellation takes you from insolvent to solvent, to the extent it renders you solvent that income is taxable. Insolvency is determined based upon Asset compared to Liabilities. In evaluating assets, retirement assets (401(k) and IRAs, etc) ARE included in the analysis. This exclusion often works for people who are under water with their home, have credit card debt and have little or no savings or retirement. The third exception, if the filing of a Chapter 7 or Chapter 13 bankruptcy - which in that case discharged debt is not taxable. Hope this helps! Be sure to listen to the Financial Crisis Talk Center on Saturday mornings 8:30 - 10 AM on WDFN 1130 AM - "The Fan"See question