Posted on: 23rd Aug, 2011 01:06 pm
Live in California and filed bankruptcy in Sept '09. Discharged in Feb. 2010.
After discharge tried to keep up on payments but were really struggling. We went for a loan modification, but that was a joke. The original loan was an interest only loan and was costing us @2258.00 per mo. The modification process immediately tacked on an impound account and raised the amount to $2498.00 per mo. Then then offered us a payment of 2234.00 per mo. for 5 years and then a boost in interest after that. We are in our 60's and the house is underwater by @$100,000. We are not going to be in better shape in 5 years. We were advised that we should stop making the payments, which were killing us before they tacked on the impound, so in April 2011 we stopped paying. Now they are going to foreclose. We did not re-affirm the mortgage in the bankruptcy, so I know that if they foreclose they can't come after us for the debt, however if we were to abandon the house would we be liable for taxes either federal or state for the difference between the amount owed and the amount that the bank can sell it for? Please advise.
After discharge tried to keep up on payments but were really struggling. We went for a loan modification, but that was a joke. The original loan was an interest only loan and was costing us @2258.00 per mo. The modification process immediately tacked on an impound account and raised the amount to $2498.00 per mo. Then then offered us a payment of 2234.00 per mo. for 5 years and then a boost in interest after that. We are in our 60's and the house is underwater by @$100,000. We are not going to be in better shape in 5 years. We were advised that we should stop making the payments, which were killing us before they tacked on the impound, so in April 2011 we stopped paying. Now they are going to foreclose. We did not re-affirm the mortgage in the bankruptcy, so I know that if they foreclose they can't come after us for the debt, however if we were to abandon the house would we be liable for taxes either federal or state for the difference between the amount owed and the amount that the bank can sell it for? Please advise.
You are still liable for the payment until the deed has been transfered into another owners name. Once this happens, the taxes would be cured. I have not seen a bill come to the previous owner. Generally the lender will pay the dues before its on the market. You may have IRS implications, as they treat a loss as income...Check with your tax professional. In CA, on purchase money, there is no right of deficiency. Good Luck