Well we met with the bankruptcy lawyer today and much to our surprise, while willing to file, he said his advice was NOT to file. At least at this time and that maybe it wouldn't be necessary.
This is the same one we saw back in January. He was a Trustee for many years. Want to say 20, but a long time. Plenty of experience.
His advice was since we are willing to bankrupct on our house ( which is necessary ) to just let it go into foreclosure like the other one. He said unless someone sues us ( which the other foreclosure has already done ) and we pointed out that that had already happened ,that we wouldn't need to file. Then he said unless someone files a judgement it still wouldn't be necessary but at the point the judgement WAS/IF filed it, the bankruptcy could still be done at that time on an hours notice.
He did not push for bankruptcy. In fact his advice was wait to see if it was needed. Surprise Greebo!!! There are still decent people/lawyers out there if needed.
We can't make the house payment when unemployment runs out and I'm getting ready for the next (3rd tier). There will be about 6-8 weeks in between according to the lady at the unemployment office. This one (2nd one ) should be close to being done. So we will see.
Without the house payment we should be able to make the rest of the bills including the credit cards. Deciding factor is what Wachovia/Wells Fargo does with their business loan in another 4 months, about April. We figure it will go from about $550 to $3000. If business picks up even a little, maybe, just maybe we can pull this out of the water. There are a couple of credit cards that are about $3000 or less and 2 equiptment items that are just several months off.
Other factor will be if after foreclosures they will just drop it and not do judgement or 1099's. He did say that even if they issued 1099's we could still file and be clear. I asked that one again and he read it right out of his law stuff and the IRS website. So I do feel better.
If we can't do this any longer at least we have a chance at not HAVING to file. Maybe. Then we could pay everything else. Maybe. If the mortgage companies and the PMI company don't push it we may be ok. Maybe. Not looking for it tho. He did say the PMI and/or the mortgage company of the house in his name could come after the business as well but could only get what the business was worth and that could be done thru the bankruptcy with a Chapter 13 payback. The house we live in can't do jack squat about the business and this house is Bank of Hell. It's in my name only.
For Scott if you read this. Yes, houses CAN be taken down totally in bankruptcy with no financial obligation left. And yes, I nailed him down. Actually did not have to "nail" him down. He read it out of his law and the IRS website. I asked a couple times and he said NO financial obligation. On either house. Multiple.
And no Florida is not a no recourse state. The bank cannot MAKE you keep the house, deal or otherwise. The court will not MAKE you keep a house, primary or otherwise and you do not have to keep it if the bank offers a "deal or break" on interest, time etc.
One word of advice he gave and I'll pass on to someone else...he said NO ONE should ever have a bank account of any kind with a bank he/she owes money to. Keep them separate. Also a separate bank account cannot be froze without a judgement and you will know that one has been issued by letter.
Will admit, so far, after we left the office, I haven't had any more chest pains. Cardiologist was not a happy camper with me yesterday. While I'm not happy about losing the house, I'm not happy about a heart attack either. Death isn't retroactive.
"Other factor will be if after foreclosures they will just drop it and not do judgement or 1099's. He did say that even if they issued 1099's we could still file and be clear. I asked that one again and he read it right out of his law stuff and the IRS website. So I do feel better."
I am no expert in this matter, but I was listening to the today show today, as I was puttering around... and I am just about 99% positive, that the financial expert said today to someone who called that although "written off debt" is taxed as income (1099) it is not the case with mortgages right now. I looked quickly and can not find the link! (I'm sorry) but hoping that other computer gurus can find it (If that is what you are worried about, I believe they said up to 200,000)
"Other factor will be if after foreclosures they will just drop it and not do judgement or 1099's. He did say that even if they issued 1099's we could still file and be clear. I asked that one again and he read it right out of his law stuff and the IRS website. So I do feel better."
I am no expert in this matter, but I was listening to the today show today, as I was puttering around... and I am just about 99% positive, that the financial expert said today to someone who called that although "written off debt" is taxed as income (1099) it is not the case with mortgages right now. I looked quickly and can not find the link! (I'm sorry) but hoping that other computer gurus can find it (If that is what you are worried about, I believe they said up to 200,000)
Well I'm not feeling better about it but I guess you could say I have come to some kind of what will be at this point will be. That's not right either but I don't know how to explain it. And yeah, sometimes when I write I get carried away like I'm holding an entire conversation just no one on the other end. Can they lock you up in a padded room for this?? Hey that would solve the housing problem.
I went and signed up last Monday and you know what that is like..sit and wait. An old man, old telling you, was there telling the girl he hadn't received. She checked and said he was in between 2nd tier and 3rd tier and that it was taking between 6 to 8 weeks for the review to see if still qualified. I know it took 3 weeks for me between 1st and 2nd. The checks started then stopped. When I went in and asked what the deal was she checked and said they had stopped because they were "reviewing". That 3 weeks bout done us in then. Somebody on a thread, don't think it was you, recently posted that they were told the same thing. 6 to 8 weeks. I can only guess they are backed up. We can't go 6 weeks much less 8.
No, did not get it in writing. I really don't feel I needed to. He went to the IRS website and read it off. I had read it before. Going to try to copy and paste here off the IRS website. 2. Is Cancellation of Debt income always taxable?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:
Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
But he didn't push for us to file. Just said if we needed to or it came to it he could get a case number in less than an hour and take it from there.
I've been having some bad chest pains for about a month. My appointment yesterday she was wanting me to do a stress test AGAIN this year and I said no at least not right now. MAYBE after the first of the year when at least it would apply to a new deductible year. Remember I have a $5000.00 deductible. I told her if I felt worse I would do it. She told me if they lasted a half hour to haul my ass to the emergency room. I think it's stress. Which still isn't good but I need to keep the stress level down.
One word of advice he gave and I'll pass on to someone else...he said NO ONE should ever have a bank account of any kind with a bank he/she owes money to. Keep them separate. Also a separate bank account cannot be froze without a judgement and you will know that one has been issued by letter.
This is very good advice to everyone. Banks can and will use the 'right to offset' to collect a debt. At the first bank I worked at, I managed the overdrawn checking accounts/past due loans and the final step in my process after my friendly calls, then my stern calls, was to utilize the right to offset before sending them to a collections.
That basically meant that if someone overdrew their account/deaulted on a loan, was making no effort to pay and wasn't responding to my calls, the bank could & would use funds in any other account that they were the primary owner on to collect the monies owed us.
Okay I hope I am understanding this. Say one owes a credit card debt to the same place they bank at and shows no intrest in paying it...that bank can just take the funds right out of your account until they get all their money back? Scary stuff.
There are some good lawyers out there! THANKFULLY I know one. He has been such a big help with settling my mom's estate, issues with the revocable living trust, etc. He gives me free advice all the time and has done tons of FREE work for me. I got a bill from his office once and he sent my check back and a very nice personal handwritten note.
I am glad your chest pains have let up. Good luck and I hope things continue to look up.
that you have not filed bankruptcy before.... and after reading everything days ago.... and coming back.... to it
I think your main concern is the house?
and what you would owe after a foreclosure took place, if it took place. (Sorry to rehash the details)... just trying to get my head around it, and in the right place for searching....I will find the link this weekend for 1099 and foreclosure; but would think that your lawyer would know it? .... but I will search for it...
I am not sure who else you owe, or how much.
Why not Chapter 13? It could save your home? or do you not want to live there any longer?
that you have not filed bankruptcy before.... and after reading everything days ago.... and coming back.... to it
I think your main concern is the house?
and what you would owe after a foreclosure took place, if it took place. (Sorry to rehash the details)... just trying to get my head around it, and in the right place for searching....I will find the link this weekend for 1099 and foreclosure; but would think that your lawyer would know it? .... but I will search for it...
I am not sure who else you owe, or how much.
Why not Chapter 13? It could save your home? or do you not want to live there any longer?
Yes, he said IF we file there would be NO financial obligation for either house.
If we do not file then none on the primary and no way of knowing on the secondary. Mortgage company, PMI company could either come after us. OR if mortgage company does not demand diference then they can issue a 1099 which would be declared as income and would be taxed as income as far as IRS. Mortgage company cannot do both.
No, we cannot keep the home. We can no longer make the payments on it soon. I am now on unemployment. His income has been cut more than in half. When unemployment stops or there is more than a couple weeks delay in between deciding whether I still qualify then it will no longer be able to be made. Just the way it is. House is $2100 and his clear income for month is $2648. Our health insurance alone is $815 a month. So no way.
We are self employed and business is just enough to keep the business running and provide the $2648 a month. This is about a third of what it used to be. And yes, we had an emergency fund to fund about 8 complete months of living expenses and we've made it 14. But it dosen't do any good to beat a dead horse. He still isn't getting up.
Like I told Nichole, anytime. Helping out here is what it is all about. She had knowledge...you had a question...she could help. Absolutely no problem.
Can you imagine a bankruptcy lawyer saying don't file now. Wait to see if necessary. I'm being a pessimist here I know but still think it's coming. Two houses ( 1 Bankk of Hell ) , 1 PMI company ( think AIG ) all three of them aren't going to let us off scott free. I mean, seriously, be realistic. So I'm getting my ducks in a row. Fingers are crossed but ducks ARE lining up,
Glad you got your answers. I think we were on the same page, just thinking of what happens for different paths. Sorry if I mis-understood.
You lawyer sounds great. I just has a friend who's attorney wanted him to file for sole proprieter business debts, but he was not yet foreclosed on his home (which he wants to let go -200k upside down). I told him, don't file yet if you can wait. If you file bk, then foreclosure 6 month from now, then they sue for the negative equity, you will have to file again to get rid of that deficiency judgement. Might be better to wait until after foreclosure to file and flush both the business and house debts in one BK action. Asked him to talk about the best timing with his lawyer.
Yes you can get out of the financial resp. for the mortgage with BK. You just have to get foreclosed on first, then the deficiency becomes unsecured debt that can be extinguished with a BK if you qualify.
I was saying you can't BK a house and get out of the mortgage debt. Meaning it has to be a combination of Foreclosure and BK. I think we are on the same page now?
I will be using the debt forgiveness act on the taxes for a friend I helped with a short sale. When BOA 1099c's her, she will qualify to not have it counted as income, because it was her primary residence. The IRS form instructions have a specific short sale example.
I hope you get everything you are looking for out of these transactions and that your stress level subsides!
** Edit - This is why we were praying that the short sale went through with BOA, because it meant we were done with the whole thing. If the buyer had walked, we would have waited 6 months for foreclosure, up to 3 years in our state to sue for deficiency (Recourse state) and then have to file bankruptcy to get rid of the deficiency which could tack on another 6 months to worrying about this one stupid property.
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