Knoxville Short Sale Question – Is Foreclosure Now The Better Option?

house-valueIn our Ask the Expert Section, we recently received a question from Dylan, he asks, "I'm currently in a difficult situation. I've been struggling to make the mortgage payments on my Knoxville home. At this point, I'm either going to do a short sale or end up in foreclosure. With the Mortgage Debt Forgiveness Act not yet extended, I'm unsure if doing a short sale is even worth the effort. Is foreclosure a better option now?" It can be an extremely tough decision to decide between a Knoxville short sale and going through foreclosure. Unfortunately, there is no easy answer to that question. It is largely personal and you'll need to decide what option is best for you. If you have questions about the possible tax implications, it is always best to talk to a tax professional or attorney. With that being said, I wouldn't necessarily base your decision on what to do solely on what happens with the Mortgage Debt Forgiveness Act. It is hard to say whether or not it will be passed this year to retroactively put the law back into effect, meaning that anyone who has to do a short sale will not have to pay taxes on the income. In both a Knoxville short sale and foreclosure, any debt still owed to the lender is considered to be "income." This means whether or not you complete a short sale or foreclosure, you could still be responsible for paying taxes on the forgiven debt. In the case of foreclosure, there are often additional fees added to what is owed from the foreclosure process, so there is a chance you could end up owing more. In addition, even if the Act is not extended, in certain cases homeowners are able to prove insolvency, meaning their debts exceed their income. If insolvency is proven a homeowner would not be required to pay taxes on the forgiven debt. Are you facing foreclosure on your Knoxville home? Please let me know if there is anyway my team and I can help you, give us a call today at 865-696-9002 or via email at [email protected]. We've helped countless homeowners in Knoxville avoid foreclosure on their homes. All of our services are done at absolutely no cost to you.

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