So, my Husband and I filed Ch. 7 last June and it was discharged in 8/2010. We paid the mortgage all throughout the process and intended to stay and try and sell the place this summer. Cut to 12/2010 and things changed, safety issues, security, bad element in neighborhood- things of that nature. We stopped paying the mortgages (1st and 2nd with same bank). We moved in June to a rental in a better area, and things are great here! However, we have this house in our names. We were sent the Act 91 in June, the day before we moved.
I called the bank on Monday of this week to see where things were with the foreclosure and he said "well it's still internal here so it's pretty much nowhere" Then he says "why don't you sell it?" I say that I can't, the house isn't worth much now. Then he says, "we can send out an appraiser and you can get a realtor and we can come up with a price that will sell it fast." I asked him if that is indeed a short sale and he says he prefers to call it a Fire Sale. He said, it's good for you because once that foreclosure hits your credit report you won't be able to buy a new house for a few years. I said that I thought it wouldn't hit our credit because of the BK7 and he said, Oh, no it does go on there. I got scared, and he said "wouldn't you like to get this house off of your hands and move on?" "It could take years for us to foreclose". Basically he is saying that they price it low and because of the BK7 we can do this "Fire Sale" or "Pain Free Short Sale" easily and since they are pricing it right, it'll move fast.
THEN- today he drops the bomb. I asked him if we would owe anything at settlement and he said no- but you will get something I like to call a Phantom Income Tax slip and you'd have to pay income taxes on the amount that wasn't paid (difference between the balance on their books and what it sells for). As If I have thousands just laying around waiting to pay for this.
So I ask all of you- This is me getting the crap end of a deal right? He was acting like he knew nothing of how the tax works and I'd have to chat with a tax professional or accountant. Ok- I totally believe that one! This isn't his first rodeo, of that I am sure. I got excited to be able to be rid of this house quickly and to be able to buy again when we are ready and not in 5 years. I don't know what to think now.
Any help or words of wisdom are greatly appreciated!
I called the bank on Monday of this week to see where things were with the foreclosure and he said "well it's still internal here so it's pretty much nowhere" Then he says "why don't you sell it?" I say that I can't, the house isn't worth much now. Then he says, "we can send out an appraiser and you can get a realtor and we can come up with a price that will sell it fast." I asked him if that is indeed a short sale and he says he prefers to call it a Fire Sale. He said, it's good for you because once that foreclosure hits your credit report you won't be able to buy a new house for a few years. I said that I thought it wouldn't hit our credit because of the BK7 and he said, Oh, no it does go on there. I got scared, and he said "wouldn't you like to get this house off of your hands and move on?" "It could take years for us to foreclose". Basically he is saying that they price it low and because of the BK7 we can do this "Fire Sale" or "Pain Free Short Sale" easily and since they are pricing it right, it'll move fast.
THEN- today he drops the bomb. I asked him if we would owe anything at settlement and he said no- but you will get something I like to call a Phantom Income Tax slip and you'd have to pay income taxes on the amount that wasn't paid (difference between the balance on their books and what it sells for). As If I have thousands just laying around waiting to pay for this.
So I ask all of you- This is me getting the crap end of a deal right? He was acting like he knew nothing of how the tax works and I'd have to chat with a tax professional or accountant. Ok- I totally believe that one! This isn't his first rodeo, of that I am sure. I got excited to be able to be rid of this house quickly and to be able to buy again when we are ready and not in 5 years. I don't know what to think now.
Any help or words of wisdom are greatly appreciated!
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