If I'm facing foreclosure on my home, would it be beneficial to file banckruptcy for remaining debt?

Question

If I'm facing foreclosure on my home, would it be beneficial to file banckruptcy for remaining debt?

Answer 1

Whoa! banckruptcy should not be your first option. Try working with a loss mitigation company that will try and get a loan mod for you that will help you save your home.

Answer 2

There are actually ways to avoid foreclosure. There are companies that will eliminate your mortgage for you. Look into http://www.speedyrealestate.info

Answer 3

There are 2 issues that you have to determine before considering bankruptcy.  The first is whether you will be liable for 1099-C Cancellation of Debt Income and the second is whether you can be hit with a Deficiency Judgment.

Had you put down your state of residence and a bit more info about your home I could give you a more concrete answer.

Regarding Deficiency Judment, every State has different Laws regarding this.  If you were to get hit with a Deficiency Judgment you can file Bankruptcy after the fact and cancel the debt.  Make sure you have your attorney file a "Motion to Avoid Judgment Lien" after dishcarge.

Tax on 1099-C Cancellation of Debt Income may or may not be a concern.  If this is your primary residence and you never did a refinance, chances are you will not have to pay tax.  Check with your CPA before making any decisions.

Also if you did pull cash out of the property and it was not your primary residence you may have to deal with Capital Gain Taxes.  A Bankruptcy will not help you here.

If you have a ton of additional debt - credit cards, auto loans, etc and you are facing foreclosure a bankruptcy may be a good way to clean everything up at once.  Check with an attorney as there are income requirements and alot of other issues that you must concern yourself with.

Mr. Financial Freedom

http://www.5stepstofinancialfreedom.com

Answer 4

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Answer 5

Bankrupcty is the only thing to file to get rid of deficiency balances. You can save the house in a chapter 7 or chapter 13.......Email me......

Answer 6

Meet with a bankruptcy attorney ASAP.  Most offer a free initial consultation - you may be able to save your home.