Bankruptcy Attorney in Montgomery County
Helping You Understand Whether You Should Short Sale Your Home
If you are unable to pay the mortgage or mortgages on your home, you may now be wondering if you should seek a short sale or allow your home to go into foreclosure. The answer to this question relies heavily on your specific financial situation. If you live in the Tri-County area, bring your questions and concerns to Stephen Ross, bankruptcy lawyer in Montgomery County, Chester County and Berks County.
At the Law Office of Stephen Ross, we have provided clear and concise legal advice to individuals who have faced this very situation. We can apply this experience, along with our systematic approach to reviewing finances, to help you understand your mortgage debt relief options.
What a Short Sale Can Mean for You
A short sale is when the mortgage company agrees to satisfy the loan for an amount that is "short" of what is actually owed. To do this, they have agreed to take a loss (this is also called a compromise of their debt position). It is true that a short sale can alleviate the constant mortgage headache you may have right now. However, before you agree to this option with your mortgage company, you need to be aware of two potential consequences:
- You will get a 1099 form at the end of the year for any loss the mortgage company took. In other words, the amount that the mortgage company took a loss on and compromised the debt for is unearned income to the borrower. This means you will be taxed on this amount, which may be more than you can afford.
- Your mortgage company may make you sign a promissory note saying you will personally pay back any loss the mortgage company takes at the sale of the home.
You do have one potential protection in this process. Through the homeowner's relief act enacted by Congress, you can be potentially absolved from any liability for doing a short sale. However, you must apply for this protection straight to the Internal Revenue Service (IRS) under form 982, and the IRS is under no obligation to approve your application.
Other Options for Resolving Your Mortgage Problems
In addition to looking at the short sale option for you, we will also research other debt relief options that may be available to you, including:
- Chapter 7 bankruptcy : Through Chapter 7, you are able to completely eliminate any mortgage debt. You are also able to stay in your home until the bankruptcy has been finalized, without making any mortgage payments, which allows you to save more money.
- Chapter 13 bankruptcy : Through Chapter 13, you not only have the option to work your mortgage payments into your repayment plan; you also may be able to strip a second mortgage from your home, if you have one.
The overall benefit of choosing bankruptcy is that you are able to walk away from your house without the tax consequences of short sales,1099 forms, 982 forms, or promissory notes.
Contact Our Pottstown Mortgage Debt Discharge Lawyer Today
Before your real estate broker talks you into a short sale, take a moment to learn more about your mortgage debt discharge options. Contact our Pennsylvania debt relief law firm today to schedule your free initial consultation.
