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During the past few years there has been a marked increase in foreclosures throughout the country, including Fairfield County. Along with the increase in foreclosures an increase in Short Sales is also occurring.
- Avoid foreclosure. A Short Sale does not require auction sign, court action or the other negative consequences of a foreclosure process. Successful negotiation of a Short Sale can avoid the negative impact and public exposure associated with foreclosure.
- Avoid Bankruptcy. Even if you are behind in your mortgage payments and owe more than your house is worth, successful negotiation of a Short Sale can pay off your mortgage and allow any shortfall to be forgiven by your lender, frequently allowing you to avoid bankruptcy.
- Discharge the balance of your mortgage debt. In a Short Sale your lender agrees to accept less than the full amount owed on your mortgage and to release you from your obligation to pay the balance, or the deficiency.
- Avoid paying taxes on the deficiency. If you owe a debt to someone else and they cancel or -forgive that debt, the cancelled or forgiven amount may be taxable. The Mortgage Debt Relief Act of 2007 generally allows you to exclude income from the discharge of debt on your principal residence. Debt reduced through mortgage restructuring as well as mortgage debt forgiven in connection with a Short Sale or foreclosure, qualifies for the relief.
- Less impact on your Credit Score. A Short Sale generally has less negative impact on your credit score as a foreclosure or bankruptcy proceeding.
Please contact real estate lawyer Elizabeth A. Edwards for additional information or to schedule an appointment.
