If you are unable to pay the amount of debt that you have accumulated and are so far behind on mortgage payments that you are also facing foreclosure, it is important to understand how a foreclosure can affect your bankruptcy. Being unaware of how this works can cost you tax dollars and can even mean that your mortgage lender could sue you for what is called “the deficiency”. The deficiency is the difference between the amount that is still owed on the mortgage (or in some states, the property’s fair market value) and the foreclosure sale price. The best way to prevent this from happening is to consult with an experienced New York State bankruptcy lawyer who can help you proceed with filing your Chapter 7 bankruptcy as soon as possible.
Advantages of Filing for Bankruptcy Prior to Foreclosure
In general, it is a better idea to file for Chapter 7 bankruptcy before your mortgage lender forecloses on your house rather than after this occurs. There are several reasons for this, but an important one is because, if you file for bankruptcy after foreclosure, your mortgage lender may sue you for the deficiency. However, if you file before foreclosure, you will lose the house, but the mortgage debt will be discharged and you cannot then be responsible for any deficiency. In addition, if you file after foreclosure and the mortgage lender decides not to sue you for the deficiency, then the IRS would consider it to be income and would tax you on it. If you file for bankruptcy before the foreclosure, there is then no tax liability for this cancelled debt.
Call to Schedule a Free Consultation With a New York State Bankruptcy Lawyer Today
If you are facing heavy debt and a possible foreclosure on your home, call to schedule a free consultation with a Long Island bankruptcy attorney today. At the Law Offices of Scott R. Schneider, we can help you sort out the financial complexities of facing both of these challenges at once. We serve the cities of Long Island, Melville, Lindenhurst and surrounding Nassau and Suffolk County communities. Visit our website at https://nassaubankruptcyattorney.com or call us at (516) 433-1555. You can count on us to give you legal guidance you can trust.
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If you are facing a possible foreclosure, I can take my two-plus decades of experience to help you save your house.
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