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Hello, I will weigh in on this to maybe prevent a decision that has consequences you don't know about. I understand your situation. I got laid off in 2006 and did a short sale in 2007. I also used to work for a mortgage lending division of H&R Block, and I am now an attorney in Florida. I don't know if there are any Alabama laws on this issue, and I'm not admitted to the Alabama bar, but these are important factual IRS considerations: 1. A short sale in your situation will create a $40,000 income recognition event - meaning, if your home is encumbered by 85k and it's sold for 45k, the IRS will consider that to be $40k of income recognized above the line. That does not mean that you will owe taxes on the entire 40k, it just means that 40k is recognized and added to your gross income. There was an IRS exemption for this income between 2007 and 2013, but that exemption has not been extended to the 2014 tax year. 2. A foreclosure will result in a sale for which you will recognize a gain or a loss for tax purposes. I am speculating on this because I don't know the Alabama market for real estate foreclosures, however, a rough estimate of 65% of market value for a foreclosure sale is pretty standard in my experience. This would be a sale of about 29k which would be applied against the 85k debt. You would recognize a 56k gain. Either way, I'd think very, very hard before I took one of those options. That additional income may cause you some serious problems. However, I do not know enough about your situation to see if the insolvency exception would apply. Also, nobody has mentioned bankruptcy as an option - it is also something to consider. It's better to deal with it as soon as you can rather than let everything slowly kill you - and you know that this is killing you. Just don't bring "BK" up here, because people will start giving you really bad advice about things they know nothing about. So, there are two pieces of advice that I urge you to follow: first, make an appointment with an attorney. I'd speak with a tax attorney before an attorney that only does bankruptcy, but if the attorney does both, all the better. The attorney could give you straightforward legal advice so that you can make the decision that's right for you. Secondly, I understand your motivation for posting this thread on the Something Awful forums, but you will not find the help you need here. I'm serious. You need a lawyer, not a goon. Don't take something that somebody said on an internet forum as a comprehensive solution. One last thing. This isn't advice; it's just something to think about. It's good to pay your bills on time, and I wouldn't ever advocate that you change your habits if you do pay well. But, a mortgage is just a contract. Breaking the contract has consequences, but it isn't a crime and it doesn't make you a bad person. This situation you are in happens all the time to people around you, and there is plenty of help available to in from the legal system. Edit: I wasn't directing the bad advice comment to any of the previous suggestions in this thread. All of them are valid. I just know of the propensity for things to get out of hand and turn into a shitshow of nonsense. KaiserSchnitzel fucked around with this message at 22:37 on Aug 29, 2014 |
# ¿ Aug 29, 2014 22:35 |
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# ¿ May 22, 2024 12:04 |
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Zapf Dingbat posted:I walk away from the thread and look at it. Okay, I'll try to catch up. Good man. And professional advice - whether it's from a lawyer or an accountant - is not going to cost as much as you think it is - when you are ready of course. Aaaand of course as soon as you post how much you are spending on food, the morons show up, as I predicted. Every thread that involves someone posting anything about their budget is a miniature Hadron collider just waiting to discover the Goon boson particle.
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# ¿ Aug 30, 2014 07:10 |