Posted on: 19th Jan, 2011 02:01 pm
i have two properties that i had to stop paying on. one lender is willing to do a deed in lieu but lender on the other property is not willing to do that and suggests that i do a short sale. i have also looked at doing a chapter 13 bankruptcy to eliminate these two debts. the only real credit card debt that i have is about 10k so i would throw that in as well. i have lost my income since i am taking care of my mom who had a stroke this past year. i also have a condo that i am current on but don't really have an attachment to.
what i want to know are the negative points of a bankruptcy other than credit score (what else does it affect?). also, what is the impact to my credit score with a bankruptcy versus a deed in lieu and a short sale?
thanks for you help
what i want to know are the negative points of a bankruptcy other than credit score (what else does it affect?). also, what is the impact to my credit score with a bankruptcy versus a deed in lieu and a short sale?
thanks for you help
Hi Guest!
Welcome to forums!
Bankruptcy should be the last option that you should consider when you're trying to get rid of debts. In case of bankruptcy, your credit score will go down by around 200 points. In case of a deed in lieu of foreclosure, your scores will go down by 250 points but you won't be liable for paying off any deficient balance to the lender.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
Bankruptcy should be the last option that you should consider when you're trying to get rid of debts. In case of bankruptcy, your credit score will go down by around 200 points. In case of a deed in lieu of foreclosure, your scores will go down by 250 points but you won't be liable for paying off any deficient balance to the lender.
Feel free to ask if you've further queries.
Sussane
I thought I would get a discharge with the bankruptcy after some time and would not be liable for the deficient balance. Is that not true? Again this is a chapter 13 bankruptcy. Also, if I don't do a bankruptcy I still also have a liability with the other property since they won't do a deed in lieu at this point. They want me first to try to sell for 90 days and then would consider it. However, without the deed in lieu I could still be liable for the deficient balance on this property which may be close to 200K+. Very upside down. With the above in mind what are your thoughts
Hi Guest,
If you file Chapter 13, you will get a payment plan in order to repay the dues to the creditors. However, if you go for a deed in lieu of foreclosure, you won't be liable for paying off the deficient balance resulting from the property sale.
If you file Chapter 13, you will get a payment plan in order to repay the dues to the creditors. However, if you go for a deed in lieu of foreclosure, you won't be liable for paying off the deficient balance resulting from the property sale.
I appreciate your answers Adonis but please look at my entire question. I have another property with a 200K deficit balance. If I don't do a bankruptcy, then I will be responsible for paying that difference. THis is the second property I have stopped paying on. You have only been addressing the first property. And yes I understand I won't owe the deficit with DIL, but I will owe taxes of about 29K on that first property due to the income that will be reported on a 1099 to me. I just figured out the taxes on these properties and it looks like I would be reponsible for possibly 100K in taxes if one property is short 100K and the other is short 200K. Again, am I missing something? If so, please advise.
Thanks
Thanks
Hi Guest!
Welcome to forums!
As the Mortgage Debt Relief Act is still in vogue, you won't be liable for paying off the taxes for the forgiven debt in case of deed in lieu of foreclosure.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
As the Mortgage Debt Relief Act is still in vogue, you won't be liable for paying off the taxes for the forgiven debt in case of deed in lieu of foreclosure.
Feel free to ask if you've further queries.
Sussane
Suzanne:
Just to be clear, I was talking about federal taxes. Does this apply if this is not my primary residence? Where can I read more about that? This is the first I heard. I did understand that if it was my primary residence for 2 years, I would not owe taxes, but otherwise yes. However, there is something about real property forgiveness as well. Are you versed in that?
Just to be clear, I was talking about federal taxes. Does this apply if this is not my primary residence? Where can I read more about that? This is the first I heard. I did understand that if it was my primary residence for 2 years, I would not owe taxes, but otherwise yes. However, there is something about real property forgiveness as well. Are you versed in that?
Hi Guest,
If your primary property goes for a deed in lieu of foreclosure, then the deficient balance will be forgiven. The forgiven debt will become taxable but due to the Mortgage Debt Relief Act, you won't be liable for paying off any taxes.
Thanks
If your primary property goes for a deed in lieu of foreclosure, then the deficient balance will be forgiven. The forgiven debt will become taxable but due to the Mortgage Debt Relief Act, you won't be liable for paying off any taxes.
Thanks
I recently have decided to short sale my home. I am about 60k upside down. But a friend keeps telling me I should file bankruptcy. I dont want to do that. Id like to take the money Im paying now for the house and put it towards the 70k in credit card debt and school loans. Which way would be better to keep from damaging my credit the least. (last time I checked credit score was above 700
Welcome KLB,
Bankruptcy is the last option that you should think off in order to get rid of your debts. If you short sale your property, it will lower your credit scores by 80-100 points. However, you will be liable for paying off the deficient balance resulting from the sale of the property.
Bankruptcy is the last option that you should think off in order to get rid of your debts. If you short sale your property, it will lower your credit scores by 80-100 points. However, you will be liable for paying off the deficient balance resulting from the sale of the property.