Tag Archives: short sale

Tips for Combatting Foreclosure

Foreclosure Attorney serving Brevard County, Florida

When you are seriously delinquent on your mortgage payments and foreclosure is imminent, do not ignore the problem! The faster you take action and contact us for help, the more likely you are to obtain a positive result. There are several options available for avoiding foreclosure of your home, which can preserve your ability to re-establish your credit score. In fact, you may even qualify to buy another home in the future.

combatting foreclosure pic

Below are a few tips to consider when you first believe that your home is vulnerable to a foreclosure action:

  1. Sell your house. Selling your home on your own prior to it being auctioned off by your mortgage lender is not only better for your credit score, but it may also allow you to keep any equity that remains in it. Where possible, you should take action to make your home appealing to potential buyers, even if it means reducing the asking price to below what you need to pay your mortgage loan in full. We can help you understand what a short sale requires or if paying the remaining deficiency is manageable for you.
  2. Negotiate better payment terms. It never hurts to discover whether your mortgage lender is willing to work out a deal with you. This may include negotiating to reduce the applicable interest rate and/or to lengthen the term of your loan to lower the amount of your monthly payments.
  3. File Chapter 7. When you file a Chapter 7 case, the foreclosure activity against you must cease, at least for a little while. During this time you can negotiate with your lender. If you decide to surrender your home in your bankruptcy filing, you can usually discharge any deficiency balance that is remaining on your debt after your home is sold at auction.
  4. File Chapter 13. If you have a steady source of income and you want to keep possession of your home, filing a Chapter 13 case can allow you to catch-up on your past due payments. You can make small payments in your repayment plan that are applied to your deficiency so when you successfully conclude your Chapter 13, you are current on your mortgage loan.
  5. Short sale. In order to short sale your home (sell it for less than what is owed on your mortgage), your mortgage lender must be involved and approve the sale. Many lenders will agree to this type of sale in order to avoid the time and cost of the foreclosure procedure. It is important that verify that the short sale of your home will be considered full satisfaction of your mortgage debt. Otherwise, you will remain liable for the deficiency balance.

Let us review your unique financial situation before you pursue any of the above options and help you understand which strategy is the most beneficial for you. We can make sure you understand the tax consequences, if any, of your decision as well as the other advantages and disadvantages.

Don’t delay any longer. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.

Struggling to Pay your Mortgage? Short Sale vs. Bankruptcy

Foreclosure Defense and Bankruptcy Attorney Melbourne Florida

Bankruptcy Attorney serving Palm Bay, Florida

If you are past due on your mortgage payments and you want to avoid a foreclosure action, you may want to consider filing a Chapter 7 or Chapter 13 bankruptcy. Another option to consider is a short sale. Either choice has its advantages, but deciding which is more beneficial for you depends on your unique situation.

Are you limited on time?

If you are not in a time-crunch, the short sale may be a viable option for you. The short sale process can be lengthy because it involves several parties in a variety of negotiations. At the end of the short sale process, there is no guarantee that the sale will successfully close.

A personal bankruptcy provides you instant financial relief. The automatic stay stops all collection activity against you while your case is pending. A Chapter 7 filing typically lasts three to five months, while a Chapter 13 lasts three to five years. In a Chapter 13, a homeowner can cure delinquent mortgage payments. In both types of filings, when you complete your case you will receive a discharge of debt that eliminates a large majority (if not all) of your debt.

Will your lender pursue a deficiency balance?

If your short sale is successful, you will still be left with a deficiency balance. The home was sold for less than what you owe on your mortgage, which leaves your lender “short.” Depending on where you live, this can leave you in a financial bind. Most states do not require a lender to waive the deficiency in a short sale, but there are a few states that require the lender to accept the short sale as payment in full. It is important to confer with a seasoned attorney to discuss this issue in your state.

When you file a bankruptcy case, a debtor can usually discharge all of the deficiency balance left on the mortgage loan. This can save you thousands of dollars!

Is mortgage debt your only debt?

A short sale only deals with your mortgage-related debt. Thus, if you are overwhelmed with credit card or medical debt, a short sale will not provide you relief from these creditors. In a bankruptcy, you deal with all of your debt. Bankruptcy is one of the most comprehensive means for dealing with all of your creditors at once.

If you are behind on your mortgage payments or your lender is threatening foreclosure, contact us to discuss all of your debt relief options.


Short Sale after Chapter 7 Bankruptcy, Good Idea or Bad?

Short sale

Many clients who come to us for assistance with filing a bankruptcy case ask if they can still short sale their home after their Chapter 7 is over. The answer is typically “yes,” but the better question is whether it is a good idea to do so. The first step is to understand how the bankruptcy process works.

In a Chapter 7 filing, your mortgage loan is a secured debt. Unless you reaffirm this debt, then it is discharged or eliminated. The creditor still has the lien on your home and the right to seek bankruptcy court permission to foreclose on it, but you are not liable to pay any deficiency balance. Thus, there are very few reasons for you to work on a short sale that does not benefit you if you already have the ability to walk away from the debt without any financial repercussions.

Additionally, Section 108 of the Tax Code does not exempt debt-forgiveness on a primary residence from taxable income, though it does exempt debt discharged under the bankruptcy code. In other words, if you have debt forgiven after a short sale, that amount can be considered taxable income. However, if that same amount is forgiven in a bankruptcy filing, it is not taxable.

While the tax code is clear that the discharge supersedes the debt forgiveness and therefore is non-taxable, it confuses the IRS. This can lead to years of you being audited and having to attempt to explain the debt being discharged to IRS agents who do not understand how the process works. It can be a huge hassle, involve lots of paperwork, and never get resolved.
If you have questions regarding Chapter 7 bankruptcy and/or short sales, let us help. Call the knowledgeable attorneys at Faro & Crowder to schedule a free consultation.


Facing Foreclosure? Know Your Options

Housing Crisis

When you are past due on your mortgage and your lender is threatening foreclosure, it can be overwhelming. You may be wondering what you can do to try to save your home. While no two cases are identical, most homeowners have several options available to them. Below are a few actions you may want to consider, but it is important that you confer with an experienced attorney to discuss which option is best for you.

Defend the foreclosure action

Many individuals do not realize that they can fight a foreclosure action. There are numerous defenses that may be available to you, including the lender having improper documentation to support the lawsuit. You may also be able to challenge unconscionable mortgage terms or unfair lending practices. There are numerous other possible defenses and we can help you explore all of them. If you are an active military member, you have special defenses available to you. In many cases, we can help you obtain a waiver of the deficiency balance, extend the sale date and even cash in exchange for your keys. If a settlement cannot be reached, we will take your case to trial.

Mortgage modification

Modifying your mortgage can provide significant financial assistance by providing you with more beneficial terms. Each lender has their own way of handling mortgage modifications and the process can be difficult, so it is important to seek assistance from an attorney experienced in handling modifications. One of the most significant factors is whether you have equity in your property because your mortgage lender is more likely to agree to a modification if the lender stands to lose money in a foreclosure. If you have equity in your home, the lender is more likely to make a profit or at least break even in a foreclosure. Mortgage modification can be obtained directly with the lender, however, success rates are exponentially higher in the context of a Chapter 13 bankruptcy.

Short sale

If you are willing to sell your house, a short sale may be a good option. The short sale process involves the homeowner obtaining permission from the lender to sell the property for less than what is owed on the mortgage loan. There are several obstacles that must be overcome to successfully close a short sale, so having a knowledgeable attorney on your side can be extremely helpful. If the bank has not agreed to waive the deficiency, a short sale may not be in the borrower’s best interests. Once the property has been sold, the borrower has no leverage to obtain a waiver of deficiency. If you are attempting a short sale without the advice of an attorney, particularly if you are relying on a real estate agent, remember that there may be a conflict of interest. The borrower obtains no benefit from a short sale with no waiver of deficiency. When the bank, usually at the last minute, refuses to waive the deficiency in writing, the real estate agent will often pressure the borrower to move forward anyway, claiming that the bank will be more likely to waive the deficiency after the short sale. Once the short sale has gone through there is no incentive for the bank to waive the deficiency. If the short sale does not close, however, the real estate agent gets no commission. This is not said to be critical of real estate agents, commissions are how they get paid for what they do. However, a real estate agent’s job is to put a buyer and seller together, not to solve a defaulting borrower’s financial problems.

If you have questions regarding how to handle a foreclosure, Contact us for a free consultation.

Bankruptcy or Short Sale: Which is better?

If you are a homeowner struggling to pay your mortgage, it is important to consider all of your debt relief options. Two options you should educate yourself about are filing for bankruptcy and short sales.

A short sale is the process that permits you to sell your house for a lower amount than what you owe on your mortgage loan. The sale proceeds are used to pay a large portion of your mortgage debt, but the lender is still “short” or owed money after the transaction has been completed.

In deciding whether filing a bankruptcy or pursuing a short sale is more beneficial for you, there are numerous factors to consider. Below are a few things to think about:

  • Time. The short sale process can be complicated and very time-consuming. You must obtain your mortgage lender’s approval to pursue a short sale and many lenders take a long time to review the documentation and provide the necessary approvals. Also, there is no assurance that your short sale will close. If you file a Chapter 7 or Chapter 13 case, you are provided instant relief from your creditors because the automatic stay prohibits any further collection efforts against you while your bankruptcy is pending. Once you obtain your discharge order, you eliminate most, if not all, of your debt.
  • Deficiency balance. In a short sale, there is always a deficiency balance remaining on your mortgage after the sale of your home. Thus, it is vital to determine in advance whether or not your lender will waive the right to collect the deficiency balance as part of the short sale agreement. If not, you will remain liable to pay the remaining amount. In a bankruptcy case, you can eliminate the deficiency balance after the short sale or foreclosure of your home.
  • Total debt. If you have a significant amount of debt in addition to your mortgage, such as medical bills or credit card debt, a short sale might not be the best option. However, if your mortgage loan is the cause of your financial troubles, a short sale could be a good solution. Filing a bankruptcy is the most comprehensive means for dealing with numerous different types of debt at one time. All of your creditors are included in a bankruptcy, so you are able to obtain a fresh financial start at the conclusion of your case.

If you are interested in learning whether a short sale or bankruptcy is the best option for you, contact us for a free consultation.


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