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TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 9850
Experience:  JD, MBA
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i owe 23k on credit cards. minimum payment is 850/mo. i have

Resolved Question:

i owe 23k on credit cards. minimum payment is 850/mo.
i have 3 houses.
house#1. is allready foreclosed. one mortgage.owe400k, bank sold for 415k. it was in both my name and my boyfriend.

house#2. is going through foreclosure. my boyfriend and i bought it with 80%&20% loan. the second is 84k. we are living in it, but stop the payment in june 09'

house#3. is in my name. its now rented out. i want to move in and keep it as primary res. mortgage is 1100/mo.

i have one property with a friend. we paid 34k in 03'. face value now -???

cash in the bank is less than 2300.

my in come is 5100/mo. before tax&deductible. net is 2400.

my question is
1. can i file chapter 7?
2. can the second mortgage on house#2 come after me?
3. do i have to pay tax on the different on forclosure?
4. what was the debt forgiveness in 09' is there a law?
5. when can i file for bk?
6. what can or can't do before filling bk, as far as purchess?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  TJ, Esq. replied 5 years ago.
Hi. I'll be glad to answer your questions, but I need a little clarification with regard to two of them.

What do you mean by "do i have to pay tax on the different on forclosure?"?

-and-

What do you mean by "what can or can't do before filling bk, as far as purchess?"?

After the clarification, I'll be glad to answer those and your other questions.

Thank you.
Customer: replied 5 years ago.

on the forclosure, because the house is sold for less than the value of the loan.( i owe 400k and the house was auction off and sold for 215k. ) do i have to pay tax on the difference of 185k?

 

i have recently paid someone i owe money to, with a convenience check from a credit card company. about 2000.00. i like to know if that is going to be a problem with filling bk? my understanding is not to charge anything prior to bk. how long do i have to wait to file?

Expert:  TJ, Esq. replied 5 years ago.

Thanks for the additional info.

1. can i file chapter 7? You can if your median income is not more than the average in your area. If it is greater than the median income, you can still file for Chapter 7 if your disposable income is not enough to pay down your unsecured debts. You can determine all of this using an online calculator found HERE.

2. can the second mortgage on house#2 come after me? Yes, the lender can either foreclose on the house, or sue you for a judgment.

3. do i have to pay tax on the different on forclosure? You’re referring to the deficiency (i.e. the amount still owed). The lender has two choices when there’s a deficiency: (1) It can sue you for the deficiency; or (2) It can forgive the deficiency and issue you a 1099. The 1099 is issued because the IRS considers forgiven debts to be income. So the answer is that you’ll have to pay taxes on the deficiency if the lender chooses to forgive that debt.

4. what was the debt forgiveness in 09' is there a law? That is a law that creates an exception to the general rule that you must pay taxes on forgiven debt. However, it only applies to mortgage used to buy a person’s primary residence. Therefore, it does not apply to houses 1 & 3. In other words, you’d still owe taxes on any forgiven debt from those houses.

5. when can i file for bk? You can file for bankruptcy any time you’d like, though you should read what I wrote below.

6. what can or can't do before filling bk, as far as purchess? With regard to the convenience check, that may be a problem. Simply put, you can’t charge up your credit cards and then immediately file for bankruptcy. That’s considered fraud. Therefore, the convenience check for $2000 would probably not be discharged in bankruptcy. In other words, you’d still owe the debt afterwards. The longer you wait, however, the less likely that is a problem. If I were you, I’d wait several months at the least.

Have I satisfactorily addressed your concerns? If not, then please feel free to ask for clarification.

If the information that I provided is helpful, then please remember to click the green accept button so that I will receive credit and compensation for my time. Positive feedback is always appreciated as well. Thank you and good luck!

.

DISCLAIMER: Please be aware that only an attorney licensed in your state is authorized to advise you in legal matters, and that the limitations of this setting may prevent your legal issues from being thoroughly addressed. Accordingly, please understand that (1) by answering your question(s) I am not acting as your attorney, (2) my answer(s) should be construed as general information only, and (3) our discussion is not an adequate substitute for an in-person consultation with an attorney.

 

TJ, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 9850
Experience: JD, MBA
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