Exploring Your Options to Avoid Foreclosure

When facing foreclosure, many individuals are anxious to explore their options. While they do not allow you to keep your home, a short sale or a deed in lieu of foreclosure may allow debtors to forego any debt on the property while moving on with their lives. There may be liabilities left over after a short sale or deed in lieu of foreclosure that are not often discussed. Furthermore, there may be tax consequences that arise from these transactions that should be reviewed prior to moving forward with these options.

To discuss the possibility of a short sale or deed in lieu of foreclosure, contact the Law Offices of Beth B. Carter. At the firm, attorney Beth Carter can review your situation and explain whether or not a short sale or deed in lieu of foreclosure may be beneficial in your case.

To schedule a free consultation with attorney Beth Carter to discuss your foreclosure options, call 704-817-0269, toll free at 888-354-6975, or contact her online. Home and off-site visits are available by appointment.

What Is a Short Sale and Deed in Lieu of Foreclosure?

A short sale is the sale of a property when a lender or bank agrees to discount a loan balance due to a borrower's economic hardship or the negative equity in the real property. Lenders often allow this when it will result in a smaller financial loss for them than a foreclosure. This may be the "best" option in a difficult situation.

A deed in lieu of foreclosure is an option whereby the borrower conveys all interest in the property in question to the lender in order to satisfy the defaulted loan. Once the deed is signed, foreclosure is avoided, though the borrower also conveys the home to the mortgage holder. A deed in lieu of foreclosure without recourse can be beneficial to the borrower since the document releases the borrower from all or most of the debt that is connected with the loan. A deed in lieu offer should be reviewed by a professional to ensure a comprehensive understanding of what liability may remain.

Tax Liabilities and Potential Deficiency Balances

After a short sale or deed in lieu of foreclosure, there may be potential tax repercussions and/or potential deficiency balances on the property. The mortgage company will sometimes send you a 1099 form for the amount of debt that was canceled. This may result in you having to include this debt forgiveness as income and having to pay taxes on this amount.

Before you go through with a short sale, deed in lieu of foreclosure or other foreclosure alternative, it is important that you speak to an experienced lawyer in order to ensure that any tax liabilities or balances can be properly addressed.

Contact a Lake Norman-Area Attorney to Learn More

The Law Offices of Beth B. Carter in North Carolina offer a free initial consultation to answer your questions about short sales, deeds in lieu of foreclosure and other foreclosure and bankruptcy options. To schedule your meeting at either the Denver or Huntersville offices, call 704-817-0269 (toll free at 888-354-6975) or contact the office online.