Is strategic default a good strategy for Michigan foreclosures? I recently saw a piece on 60 Minutes talking about a process called “Strategic Default.” With a strategic default, a homeowner intentionally stops paying their mortgage and lets the bank foreclose on the house. This is an option that many homeowners are considering when they are “upside down” on their mortgage – the current fair market value of your house is way less than the amount of your mortgage debt. Here in Mid Michigan, I have seen current house values that are less than 10% of the amount of the mortgage debt. That’s right – I have seen a house with $90,000 in mortgage debt that is now worth $7,000. If you don’t believe me, call…
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Personal Michigan Bankruptcy Stories: Bankruptcy Client
This is a story I received from a client who retained my services for a Michigan chapter 7 bankruptcy. I don’t usually post personal stories of people who filed bankruptcy, but he not only gave me permission, he encouraged it. Again this perspective on filing a chapter 7 is his, and not my own, and it isn’t meant to be advice…. To properly discern whether filing bankruptcy in Michigan is an option, let alone the best one for you, I’d recommend getting a free bankruptcy consultation. If things are piling up you can stop all that nonsense that comes with being behind the eight ball,you can call now and schedule one or just fill out the form and I’ll be in touch. Here is that…
Bankruptcy and The Bible
Bankruptcy and the Bible We live in a time like no other. Here in Michigan, many of us are struggling to just to keep up with our day to day living expenses. As a result of divorce, job loss or illness, many of us have incurred debts that we can never repay. Many Christians feel guilty about filing for bankruptcy. We know that bankruptcy is a legal right guaranteed by the Constitution – but still – we are buried in guilt because of our strong Christian beliefs. Before I filed bankruptcy myself back in 2005, here are some things that I thought about. The Bible Does Not Condemn Bankruptcy First and foremost, the Bible does not condemn bankruptcy. In fact, the Old Testament provided that…
Is the debt canceled in a short sale treated as taxable income?
The Mortgage Forgiveness Debt Relief Act of 2007 excludes canceled debts on your personal residence from being classified as income.This special, limited exception was extended through 2012. Let’s say you negotiate a short sale on your house like this: You owe $100,000 on the loan, but the house is only worth $50,000. You find a buyer for $50,000 and the bank accepts a short sale in the amount of $50,000. Under the old law, you would receive a 1099-C for the $50,000 that was canceled and you would have to pay income tax on that amount. But now – under the new law – that $50,000 can’t be classified as income and you can’t be taxed on it.
What’s the difference between the cancellation of a debt or the discharge of that same debt in a Michigan bankruptcy?
The difference has huge tax implications. Discharged debt is not taxed as income to you – BUT canceled debt is treated as income and taxed. Let’s say that you owe $100,000 on an unsecured loan. You default after paying off $50,000 and you still owe $50,000. If your banks writes off the $50,000 balance and cancels the debt – they could send you a 1099-C and require you to claim that $50,000 canceled amount as income on your tax return. But let’s say that you file a Chapter 7 bankruptcy in Michigan. You list the $50,000 amount you owed as an unsecured obligation and it is discharged. There is no tax liability – Zero! And, if your creditor tries to nail you with a 1099-C…
Can I convert my Chapter 13 into a Chapter 7 bankruptcy?
Yes. You have an absolute right to convert your Chapter 13 to a Chapter 7. You can get more details and all your Michigan bankruptcy related questions answered via a free evaluation… It’s a conversation you’ll be glad you had.
Do I get to keep my income tax refund?
The right to receive an income tax refund is property of your bankruptcy estate. Income tax refunds are typically exempted from the reach of your creditors and you get to keep it.