In our Ask the Expert Section, we recently received the following question from Amanda, “I am upside down by $300,000 on my Knoxville home. I want to move, but I am concerned about having that $300,000 debt chasing me for the rest of my life. A friend mentioned I could get it wiped out by filing for bankruptcy. Should I try to do a short sale on my Knoxville home, and then declare bankruptcy. Or, just declare bankruptcy and get rid of the house in the bankruptcy?”
In most successful Knoxville short sales, the upside down debt will be erased. When a lender lender approves a short sale, they are willing to forgive the unpaid debt.
And, many states have laws that forbid banks from pursuing you for a deficiency after a short sale or foreclosure. Most lenders do not pursue borrowers. In fact, they will specifically release you from the debt. But, every situation is different.
Under Mortgage Forgiveness Debt Relief Act and Debt Cancellation, distressed homeowners do not have to pay income tax on their forgiven debt. The Mortgage Forgiveness Debt Relief Act expires at the end of 2012. President Obama has included it on his FY2013 Budget Proposal. The proposal calls for an extension the the policy through January 1, 2015, after which the government would see if an extension is still appropriate.
Are you thinking about doing a short sale on you Knoxville home? Please let me know if there is anyway that I can assist you, I have help many Knoxville homeowners explore their alternatives to avoid foreclosure. I can help you do a short sale your Knoxville home and get back on your feet. Send me an e-mail at [email protected]. I will contact you for a free consultation. When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at (865) 696-9002.