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Bankruptcy May Be Only Relief for Homeowners with Mortgage Debt Forgiveness

February 20, 2014 / Filed Under: Mortgage Debt Relief, News

During the economic and housing crisis, Congress passed legislation that allowed homeowners who lost their home to foreclosure or a short sale, to not have to claim their mortgage debt forgiveness as taxable income.

However, the law enacted in 2007 expired on December 31st, 2013, and as of this writing, has not been renewed by Congress. Unless a homeowner files bankruptcy they will now have to pay income taxes on the mortgage debt that was forgiven by the lender. “It is inherently unfair for the big banks to be allowed to write off these payments while struggling homeowners are hit with new tax bills they can’t afford,” said Martha Coakley, Massachusetts Attorney General.

Mortgage-Debt-Relief-300x198For example, if a homeowner has a $150,000 mortgage balance and the lender agrees to a $100,000 short sale, a homeowner in a 25% tax bracket would owe an additional $12,500 in Federal income taxes for the amount of the forgiven mortgage debt.

If Congress does not take action to renew the exemption, the only way for struggling homeowners to seek relief will be to consult with a bankruptcy attorney to determine if they qualify for bankruptcy protection for mortgage debt forgiveness. Although Senator Debbie Stabenow (D-MI) is sponsoring a bill to renew the exemption, given the current climate in Washington these days, it seems unlikely that it will be renewed any time soon.

 

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Principal Office Located in Hurst, Texas Ebert Law Offices P.C.

1726 Chadwick Court Suite 100
Hurst, Texas76054
Tel:(817) 268-2468
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Copyright © 2014 - 2019 · All rights reserved · Ebert Law Offices, P.C., 1726 Chadwick Court Suite 100, Hurst, Texas 76054

Dear friends,

Thank you so very much for coming to our site. After almost 50 years serving the financial needs of Tarrant County residents, we decided to sell our firm to Vida Law. Like us, Vida is a highly respected, family-owned law firm located less than five miles from our offices.

The decision to sell Ebert Law did not come easily, nor were we hasty in deciding the firm we wanted to sell to. We chose Vida because their business and personal principles are very much in line with our own, so we know they will take care of our clients as we have for the past five decades. Here’s a link to the Vida site, or if you wish to call them their number is (817) 358-9977.

Warm regards,

David Ebert
Ebert Law Offices, P.C.