Since 2008, some homeowners have seen their home’s market value fall below their mortgage balances.  Many have found that they now owe tens of thousands of dollars more to the mortgage company than their home is worth. What can you do to protect yourself?

     “Short Sale” is a real estate term that has entered our everyday language in recent years. A short sale is done when the market value of the home is less than the amount owed to the mortgage lender.  The mortgage lender must agree to take less than they are owed on the house so that the seller give the buyer good title to the house.   Here is where things get complicated.  The seller makes legal promises and warranties to the buyer, whether the house is sold short or at a profit.  This means that the seller can both lose money and be liable to the buyer into the future.  So, what happens after the short sale?

     The mortgage lender is still owed money after a short sale. This can add up to tens of thousands of dollars that is owed by the seller, even after the short sale is done! The amount left owing is called a deficiency balance. The lender can agree to forgive the deficiency balance and send the Internal Revenue Service a 1099 form.  They usually don’t. They will want the seller to sign a new loan agreement to pay the deficiency balance. It’s a loan payment without a house. There is another way.

     Chapter seven bankruptcy protects better than a short sale in many situations.  When a house is surrendered in bankruptcy, there is no deficiency to pay.  You have made no promises or warranties to anyone.  They get their house, you get your freedom.  The matter is quickly and discreetly handled.  Your fresh start begins sooner. 

     In most cases, bankruptcy law allows you to keep paying for your current house and automobile.  Each person’s situation is different.  Come talk to me for free.  I can tell you how bankruptcy can protect you and give you a fresh start.

They can’t take your money unless they sue you.  Credit cards are unsecured loans.  There is no car or House or TV to take back if you can’t pay the bill.  The credit card lender can easily get the Judge to rule for them and enter a judgment against you for the bill plus their lawyer fees and costs.  They bring a copy of every credit card purchase you have ever made to show as evidence to the Judge.

In Alabama, the judgment allows the credit card lenders to take money out of your checking or savings account.  They can garnish your paycheck. This means that your employer is Ordered to take twenty-five cents of every doallar you earn and send it to the credit card lender that got the judgment against you.  If you own land they use the judgment to ask the Judge to put a lein on your home.  They get 1% interest every month that is added until the judgement is paid in full.

It sounds hopeless, but it’s not.  To protect yourself, you should act quickly before they have a judgment entered against your name.  I can protect you with a bankruptcy or a Federal Bankruptcy Court enforced debt reorganization.  Once they have a judgment, I can have it removed.  It just costs a little more to fix it.  Come sit down and let’s talk about your specific situation.  The first visit is free.

You can get protection from creditors and pay them back under the protection of the Federal Courts without filing Chapter 7 bankruptcy.  Many people qualify to pay pennies on the dollar.  Come by for a free evaluation by Mr. Davis  (not a legal secretary, like the big firms)!

Come in for a free hour of legal analysis

Brent W. Davis