Los Angeles County Lawyers - Short Sales

If you do not have the income necessary to remain in your home, there are still ways to avoid having a foreclosure on your credit report. If you can get your lender to agree, a short sale may be a good option to avoid defaulting on your mortgage and having your home foreclosed. In a short sale, you arrange to sell your home for whatever price the market will bear. In return, the lender agrees to forgive any remaining balance that you would otherwise owe after the sale of the home. In this way, you can sell the home for a price that is "short" the initial purchase prices.

In a short sale, the lender has the final say on whether or not to approve the home's sale. You may not know beforehand what price will be acceptable to the lender, so you may have to go through one or more rounds of negotiations before the sale is approved. Once approved, however, the new owner of the home will take over with the new mortgage, and you will be free of the obligation. While a short sale will show up on your credit report, it is likely to be less damaging than a foreclosure, over all.

Although a short sale can save your credit report and free you from you financial obligation to repay the full debt of the mortgage loan, there are a few concerns. The main concern when it comes to a short sale is that the amount of your mortgage that is forgiven may be subject to a forgiveness tax. This is because the government considers any portion of a mortgage debt that is forgiven by the lender to be additional income. If the amount is significant, it could move you to a higher tax bracket, increasing your taxes overall, as well.

Short sales can be a beneficial means to avoid foreclosure, but they are not for everyone. The tax obligations caused by a short sale may even be enough to push some individuals into bankruptcy, even if they do avoid the foreclosure itself. It is important to weigh the pros and cons of all options before you make your decision - and with solid, reliable legal advice, you can make the best decision possible for your unique situation. Contact our office today and arrange for a free initial case evaluation. Our attorneys specialize in Los Angeles County Bankruptcy Law, and we will help you understand how your short sale may impact your financial freedom. Contact us today, and be certain you are fully aware of all of your options, and how they can help you to move forward with your financial goals.