Posted on: 02nd Nov, 2007 06:36 pm
we short sold our home in may of this year for roughly $38,000 less than we owed. we had to sell because the house was more than we could afford and we were falling behind. we had to short sell because we had a cash-out refinance which, based on what we later found out, relied on an appraisal which inflated our property value by roughly $28,000 and involved some other predatory lending stuff. when we finally got a copy of the appraisal 6 months after the refinance (what a runaround that was), we discovered the appraiser "cherry-picked" properties, which were technically in our neighborhood by the .5 mile standard, but were not really in the same neighborhood in order to validate his appraisal value. trust us, we had another appraiser look at the property and he said there was absolutely no way at the time of the appraisal, our home was worth that much. not sure what kind of recourse we have there but anyway, i digress....
my question is this: when we were working with the lender on the short sale, we were under the impression that the difference would be forgiven and we would receive a letter to that effect at closing. however, at closing, we were instead given a letter to sign stating we understood the difference was our responsibility. we decided we would rather sign the paperwork and get out of the house instead of letting it go into foreclosure. for the last six months we have received one phone call each month asking us to pay the remaining balance in full or make outrageous monthly payments (the same payment our old mortgage was!). we had a debt plan to pay off our other debt in roughly 3 years but there is no way in our current financial situation that we could pay more than maybe $100/month until our other debt is paid off. they won't take such a small monthly payment even on a short term basis and have now charged off the balance and sent our account to collections. if anyone has any suggestions or help on what to do or maybe a referral to someone who can help us negotiate this out with them, i would really appreciate it. we are in west michigan.
my question is this: when we were working with the lender on the short sale, we were under the impression that the difference would be forgiven and we would receive a letter to that effect at closing. however, at closing, we were instead given a letter to sign stating we understood the difference was our responsibility. we decided we would rather sign the paperwork and get out of the house instead of letting it go into foreclosure. for the last six months we have received one phone call each month asking us to pay the remaining balance in full or make outrageous monthly payments (the same payment our old mortgage was!). we had a debt plan to pay off our other debt in roughly 3 years but there is no way in our current financial situation that we could pay more than maybe $100/month until our other debt is paid off. they won't take such a small monthly payment even on a short term basis and have now charged off the balance and sent our account to collections. if anyone has any suggestions or help on what to do or maybe a referral to someone who can help us negotiate this out with them, i would really appreciate it. we are in west michigan.
Hi,
It is possible for the lender to send your account to the collection agencies even after a charge off.
If your lender has not issued a 1099-C form, then you cannot consider your debt as forgiven. If this was sent to the IRS, you may claim this unpaid debt as your income and give taxes on this amount. If you are paying tax, the lender will not come after you but this will show on your report.
Since your account is already with the collection agencies, you have to talk to them for some repayment option. You may offer them the $100 per month and see if they are willing to accept that.
Another possibility is to negotiate with your lender and come to a settlement. If they agree to accept a lesser amount, get that confirmed in writing and pay it off.
It is possible for the lender to send your account to the collection agencies even after a charge off.
If your lender has not issued a 1099-C form, then you cannot consider your debt as forgiven. If this was sent to the IRS, you may claim this unpaid debt as your income and give taxes on this amount. If you are paying tax, the lender will not come after you but this will show on your report.
Since your account is already with the collection agencies, you have to talk to them for some repayment option. You may offer them the $100 per month and see if they are willing to accept that.
Another possibility is to negotiate with your lender and come to a settlement. If they agree to accept a lesser amount, get that confirmed in writing and pay it off.
Hi emiller,
I think it will be better if you talk to the lender and settle the matter. Try to pay the remaining amount in small installment; otherwise the collection agency may create problem for you and it will also affect your credit report.
I think it will be better if you talk to the lender and settle the matter. Try to pay the remaining amount in small installment; otherwise the collection agency may create problem for you and it will also affect your credit report.