This is a followup to yesterday’s post, where I reassured debtors that filing a bankruptcy case does not in every instance lead to the loss of a home.
Today we deal with those folks who WANT to walk away from their houses. Typically, these debtors are seriously upside-down on their mortages, and often months behind to boot. Some may have relocation plans in another part of the country. All things considered, they may be better off just letting the house go.
Bankruptcy can help these people as well, especially by eliminating any chance that lenders can chase them for a deficiency judgment months or years from now. If you just leave the house and never file a BK case, your creditors could be hounding you for years for the balance!
Bankruptcy can also avoid the unwanted tax consequences that often accompany deeds-in-lieu of foreclosure, short sales, cash-for-keys, and other bank sponsored agreements concerning the property. What you don’t want is to be hit with a massive 1099 next tax season, and not have the cash to pay the IRS on it. Bankruptcy avoids this problem, and you don’t have to worry about your real estate mess turning into a tax mess as well!.
If you are thinking of giving up your home, give me a call, and find out if a well-timed bankruptcy can avoid some of these headaches.
By Doug Beaton