Chapter 7 Bankruptcy, can it help you?

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Chapter 7 Bankruptcy in New Jersey

A Chapter 7 bankruptcy is a liquidation bankruptcy that can help you keep your home and your car, stop creditor harassment and garnishments, but most of all, gives you a fresh start.

What is a Chapter 7 Bankruptcy?

Chapter 7 is a liquidation bankruptcy meaning it can eliminate most types of unsecured debt. Examples of unsecured debt are credit cards and medical bills.

How can Chapter 7 Bankruptcy help you?

Keep your Home and your Car
Besides eliminating your debt, you will, under most circumstances, keep your home, your car and your personal belongings. This will allow you to eliminate your debt and get a fresh start.

Stop Creditor Harassment
Are creditors calling you at home and at work? Are they contacting your friends and family members? Put an end to your creditor harassment.. Once you retain our office, you will be able to refer your creditors to us. The creditor harassment will stop immediately.

Stop Garnishments
Are you currently experiencing garnishment of your wages? Have you been notified that garnishment may soon begin on your wages? A Chapter 7 bankruptcy is one of the most effective ways to stop garnishments.

Eliminate Debt
Debts like credit cards, pay-day loans, medical bills, law suits, utility bills, repossessions, or foreclosure deficiencies can be completely eliminated without payment to your creditors.

If you are feeling overwhelmed with your debts, we urge you give us a call and come meet with our bankruptcy specialist who will carefully analyze your case and help you determine if bankruptcy is right for you. Call us at today 201-326-4045

Mortgage Forgiveness Debt Relief Act expired, what is the IRS “insolvency clause” and how could this help you?

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The Mortgage Forgiveness Debt Relief Act expired December 31, 2013. The Act prevented homeowners who go through a short sale or foreclosure from being taxed on the amount of their mortgage debt that has been forgiven. the debt that is forgiven is normally considered taxable income. The good news is there is still a way to avoid paying income tax on forgiven debt.

Many Homeowners are not aware that they may still qualify for tax relief via the IRS “insolvency clause”. The clause states that a seller is exempt from paying tax on any forgiven debt to the extent that they are insolvent.

What does it mean to be insolvent?
Insolvent is when the borrower’s debts and liabilities exceed their assets by more than the amount of debt forgiven. In this case the borrower would not have to pay taxes on the forgiven debt.

How to calculate insolvency:

Add up all of your debts/liabilities in one column and all of your assets in another.the IRS wants you to include the mortgage debt as a liability, and the fair market value of your house as an asset. Let’s say you have $500,000 in assets and $600,000 in debts/liabilities. You are insolvent by $100,000.

ASSETS LIABILITIES INSOLVENCY

$500,000 – $600,0000 = [ $100,000 ]

Since your insolvency amount of $100,000 equals the forgiven debt amount of $100,000, it will be considered even and you will not have to pay taxes on that forgiven debt.

Likewise, if let’s say you were only insolvent by $80,000. In that case, you would still have to pay income tax on the remaining $20,000 of forgiven debt.

If you have any questions of this law please contact or feel free to comment below.

Que es un Short Sale? What is a short sale?

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LA DEFINICIÓN DE SHORT SALE, O VENTA CORTA, SEGÚN FANNIE MAE: “El proceso mediante el cual un administrador trabaja con un prestatario en mora para vender una vivienda a través de un profesional de bienes raíces antes de una venta por ejecución hipotecaria. La palabra corta (short) se refiere a que la suma obtenida por la venta de la propiedad se queda corta o no paga en su totalidad el balance del préstamo respaldado por la propiedad.”

Una venta corta se realiza cuando la propiedad no tiene plusvalía o “equity” y el dueño no puede cumplir con el pago de la hipoteca, ni puede solventar otros gastos relacionados con la venta de la casa.  La financiera le perdona la diferencia entre la cantidad que debe y la cantidad por la cual se vende la casa.  El banco, además de perdonarle al propietario una parte de la deuda, cubre los gastos relacionados con la venta de la propiedad, incluyendo comisiones a los agentes de bienes raíces y gastos de cierre.

Tanto el propietario como el banco deben aprobar la venta corta.  Por lo general, el propietario toma la decisión de hacer una venta corta como una alternativa a la ejecución hipotecaria (“foreclosure”), y el banco la aprueba por la misma razón, ya que generalmente la perdida financiera causada por un “foreclosure” resulta más alta que la causada por una venta corta.
Tanto el short sale como la ejecución hipotecaria tiene un efecto negativo en el crédito, sin embargo, hay posibilidad de que el efecto negativo  sea menor en un short sale.

Se deben tomar en cuenta todas la posibles consecuencias, así como los requisitos, de un short sale versus una ejecución hipotecaria efecto en el  crédito, impuestos, el tiempo para poder volver a comprar una casa, etc.  Cada situación es distinta y, por lo tanto, las consecuencias van a ser distintas para cada persona.

RESUMEN:

  1. Venta corta, o short sale, es la venta de una propiedad a un precio menor de lo que el propietario debe.
  2. Un short sale debe ser aprobado por el propietario y por la entidad financiera.
  3. Los gastos relacionados con la venta de la propiedad son cubiertos por la financiera.
  4. El short sale es una alternativa para evitar la ejecución hipotecaria (“foreclosure”).
  5. El efecto negativo en el crédito de un propietario podría ser menor en un short sale que en una ejecución hipotecaria.

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THE DEFINITION OF SHORT SALE AS PER FANNIE MAE: “The process by which a manager works with a delinquent borrower to sell a home through a real estate professional before a foreclosure sale. The word “short” refers to the sum obtained by the sale of the property which often does not cover th3  full balance of the loan backed by the property.”

A short sale takes place when the property has no goodwill or “equity” and the owner can not meet the mortgage payment. The lender may forgive the difference between the amount owed ​​and the amount for which the house is sold. The bank In addition to forgiving part of the amount owed and will also cover costs related to the sale of the property, including commissions to real estate agents and closing costs.
Both the owner and the bank must approve the short sale. Usually, the owner makes the decision to do a short sale as an alternative to foreclosure and the bank approves it for the same reason, because usually the financial loss caused by a “foreclosure” is higher than that caused by a short sale.
Both the short sale and foreclosure have negative effects on the borrower’s credit, however it is possible that the negative effects may be less in a short sale than in a foreclosure.

Borrowers must take into account all the possible consequences, and the requirements of a short sale versus a foreclosure such as the effect on credit, time it will take to be able to purchase a new home now in the future, etc.. Every situation is different and, therefore, the consequences will be different for each person.

SUMMARY:

  1. Short sale, or short sale is the sale of a property at a lower price than what the owner owes.
  2. A short sale must be approved by the owner and by the financial institution.
  3. Expenses related to the sale of the property are covered by the financial Institution.
  4. The short sale is an alternative to avoid foreclosure.
  5. The negative effect on a homeowner’s credit could be less in a short sale than a foreclosure.