ankruptcy is a state in which an individual is declared financially distressed and not in a position to pay off debts as they fall due. Its important for one to know when to file a petition for bankruptcy. One has to look for a financial adviser who will help him weigh the various options available.

For one to file for bankruptcy, in case it is done voluntarily, you must also submit a copy of your financial statement to show how you are fairing financially. Under the liquidation chapter the assets of the debtor can be sold off to cover the debt. This will be done with the help of an appointed trustee who auctions the assets of the debtor.

He then divides the proceeds amongst creditors who have genuine claims against the debtor. It is important to note that however much the debtor may be willing to have the property auctioned, not all property is treated as assets. Some property such as domestic property or items that help one to make a living may not be treated as assets for auction.

Your house may not be sold off if it is under mortgage but other assets such as land or a house that has been fully paid. Vehicles are also considered as assets as long as they are fully paid for. It is however important to find out from a financial adviser whether certain items can be considered as assets. Unlike in the past, pensions are no longer considered as assets. 

For more information please visit: http://www.floridalawattorney.com

Bankruptcy should always be the very final option when it comes to a solution to save your home from foreclosure. Unfortunately, it is very devastating to you financially as it totally ruins your credit. And many people who use bankruptcy as an option end up going into foreclosure anyway.

Bankruptcy not only ruins your credit, but it can also cost you a job. An increasing number of companies are seeking a credit check on employee applicants. A bankruptcy can actually prevent you from getting hired as you will not be able to explain the reason for the bankruptcy, no matter how valid. An employer will take a look at the bankruptcy on your credit report and assume that you are unreliable and irresponsible.

Bankruptcy can also prevent you from getting another loan for years afterwards. This includes a car loan, mortgage or even a personal loan. There are many disadvantages to filing bankruptcy.

Chapter 7 bankruptcy allows you to discharge all of your debt and can, in some cases, allow you to keep your house – if you do not have more than 10 percent in equity in your home. If the home appraises out for more than 10 percent in equity, you may end up losing your home in bankruptcy court as the sale goes towards discharging your other debt. Chapter 7 Bankruptcy should not be used unless you have less than 10 percent equity in your home and owe a substantial amount of debt in unsecured credit cards. If you have been using your credit cards as a way to make the gap from paycheck to paycheck, you might find that you are heading towards foreclosure anyway. As you can only file a Chapter 7 bankruptcy once every 8 years, you may be stuck with a deficiency judgment that you cannot discharge.

Chapter 13 allows you to consolidate your debt but does not discharge it. This is the best option to choose when you are considering bankruptcy as a way to save your home. You can only file Chapter 13 bankruptcy every 6 months and it has a severe impact on your credit. You will have to pay your debt to a trustee assigned by the bankruptcy court judge on a monthly basis. At 1st Foreclosure Prevention, we have attorneys that understand about bankruptcy and can help you with this option if it is right for you. Due to the devastating nature of bankruptcy, this should only be the very last resort.

SELLING YOUR HOME TO STOP FORECLOSURE 
You do not have to stay in your home if you are finding that it is too much to handle. You have several options of how to get out of your home that involve selling it to prevent a foreclosure. Of the two options available to you with regard to preventing foreclosure – saving your home and selling your home – selling your home tends to be the best way out of a bad situation that enables you to get a fresh start. There are several options when it comes to selling your home. You can sell to an investor, list it with a realtor or you can opt for a workout agreement. There are pros and cons to all of these options, with selling to an investor being the most favorable.

SELLING YOUR HOME TO AN INVESTOR 
There is nothing like being able to get a second chance to make a fresh start. When you sell to an investor before a foreclosure, you can get out of your home quickly and be able to turn over the keys without having to look back. While buyers will want to inspect the house and may even order a home inspection that will require you to fix things in order to sell the home, when you sell to an investor, you are selling the home as is. Selling to an investor is the quickest way out of your house.

When you use a loss mitigation company like 1st Foreclosure Prevention to help you with an investor sale, the firm can stop the foreclosure process immediately and you can then get ready to move out. Most of the time, the investor will give you a very flexible move out schedule. The advantages of this type of sale is that you do not have to worry about a foreclosure being on your record as the debt will reflect as paid on your credit report. You can walk away from a bad deal without having to look back and get a fresh new start in life. The disadvantage of this type of sale is that it can be very time consuming to line up the investor and get the lender to agree to take less in payment so that they do not have to go through the foreclosure process. This is why it is best to use a loss mitigation company that will tell you if you qualify for such a sale and can even facilitate it for you.

LISTING YOUR HOME WITH A REALTOR 
If you have time and want to walk away from the house with cash, then you can list with a realtor. Investment selling is better for those who want to get out fast and may even owe more on the property than the property is worth. Listing your home with a realtor gives you time to get another place and perhaps downsize.

The negative aspect to listing your home with a realtor is that you have to pay a sizeable fee to the realtor who lists the house that will eat into your equity. You will also have to pay taxes and other fees in most states. If the buyer wants a home inspection, you will have to pay for it and chances are that the inspection will reflect problems that the buyer wants you to fix. This can lead to more out of pocket expense.

Listing your home with a realtor also entails making sure that your home is presentable all of the time and having to have the home open for inspection at a moment’s notice. These are all negatives when it comes to listing your home with a realtor. In addition, because home values have declined along with the number of buyers, you may find that you have quite a ways to go before your home is sold. 

You do not have to feel helpless in the face of foreclosure. There is help available to you. Whether you wish to keep your home or if you just want to sell it and get a fresh start, specialists can help you find the right option that will work for you.

For more information please visit: http://www.floridalawattorney.com

A short sale is likely one of the most misunderstood transactions in real estate and foreclosure. I ask people all the time if they know what a short sale is. Many times, they say yes and when I ask them to describe a short sale to me, their understanding is often quite far from reality.

While banks don’t necessarily like short sales, they don’t like foreclosures even more. When a foreclosure happens, it not only ruins the borrowers credit and it’s a total loss for the bank but it also affects the values of other homes in the neighborhood.

For a homeowner, a short sale is a way to stop the foreclosure process and reduce the damage to their credit. Credit repair will be much easier after Short Sale than if you lose your home to foreclosure. This is because a short sale generally remains on your credit for 2 years while foreclosures are present for 5-7 years.

Although a short sale is not the first choice for a lender, it does generally help them collect as much money as possible when a home goes into foreclosure. Most lenders calculate their loss on a foreclosure as high as 50%. If they can sell a home, using a short sale, for 70% – 80% of its value, this is a 30% – 40% improvement over a complete foreclosure.

When attempting a short sale, it doesn’t matter what your income level is, or what your home is worth. Virtually everyone can apply for a short sale. It’s just a matter of negotiating with all the parties involved to arrange the best possible solution to a bad situation. Even with more than one mortgage and even if your home is completely upside down, a short sale can help everyone involved.

You must keep in mind though, there are still options available that may allow you to keep your home with a lower monthly payment. In more and more cases, we are seeing lenders agree to loan modifications that include lowering the balance on a mortgage. In this type of situation, you may be able to keep your home with a more affordable monthly payment. Even in modifications where the amount owed is not reduced, you may still be able to save your home with a successful modification.

A mortgage modification is when the bank agrees to modify the old terms of the loan to better suit your new income level. This may mean lowering your interest rate, extending the term of your loan, or even reducing the total amount owed on the mortgage. For most, this is like refinancing your home and getting a reduced mortgage payment.

But if you’ve already reviewed all the other stop foreclosure solutions and a short sale is your only solution, then you should at least have an idea of what a short sale is.

Imagine homeowners who finds themselves unable to meet their monthly mortgage payments. With the loss of a job, or other hardship, times have gotten tough and house payments are nearly impossible to make for many people in the USA. After about ninety days of not receiving payments, the lenders will start the foreclosure proceedings.

An increasing problem is that, oftentimes, neither homeowners nor agents know what foreclosure options are available. With foreclosure eminent, the homeowner decides it’s in his or her best interest to try to sell the property, so they contact a real estate agent to put the house on the market.

The biggest problem is, when the home eventually sells, it might not bring enough money to payoff all the mortgages and liens. For example, the mortgage(s) payoff is $250,000, but the home only sells for $190,000, the home owner may be forced to pay the remaining $60,000 that is owed. This is where a short sale can be very effective. The bank has to agree that, based on the homeowners hardship proof, they will agree to accept the $190,000 as payment in full and eliminate the outstanding $60,000 balance.

In most cases, it’s important to hire a professional to make sure the short sale is performed legally. The last thing you need when facing foreclosure is to find out, several months after selling your property, that you still owe $60,000. Obviously, just because your lender accepts a short sale, doesn’t mean they wont try and collect the balance. This is something that needs to be worked out beforehand and needs to be done in writing. In general, most people do not have the knowledge or ability to perform a short sale without the help of a short sale specialist. The entire process can also be very time consuming and you’ll quickly realize that the nominal amount charged for such a transaction is well worth the price.

But always keep in mind, there are several other options that can prevent losing your home when facing foreclosure. mortgage modifications are gaining popularity and refinancing may still work for some. Regardless of the situation, it’s always a good idea to have a back up plan and to speak with an expert to find out all your options to save your home or credit from foreclosure.

For more information please visit: http://www.floridalawattorney.com

People who fall behind on their mortgage payments face foreclosure and consequently loose their valuable property in that proceeding. After foreclosure you can walk away from big property payment, but not from potential tax on the forgiven debt.

If the lender of mortgage sells your home for less than the amount left on your mortgage, any pardoned debt can be treated as taxable income. The tax can be assessed on what is called cancellation of debt income. This can occur when either the bank forecloses or you negotiate for a short sale.

A short sale is when the bank agrees to let you sell your home for less than what is owed. A short sale keeps a foreclosure from showing up in your credit report, but the shortfall will appear due to neglectful payment of loan. In both instances if you are obliged to pay more than what the lender receives as repayment of the loan, the remainder is cancellation of the debt that is considered as taxable as ordinary income by the IRS (Internal Revenue service is the US agency that collects taxes and enforces revenue laws).They can and probable issue a 1099 to you for the amount that they “credit” you in short sale.

If the landowner fails to meet the financial obligation to the IRS, then the IRS may charge surplus interest and of course there are penalties. There is a possible way out of part or the entire tax obligation by filling form 982. Form 982 requires proof that you are bankrupt and you must provide all documents and bank claim to support your claim of bankruptcy. Whatever may be situation it is best to consult your attorney who specializes in foreclosure procedure.

For more information please visit: http://www.floridalawattorney.com

When a property is about to be put up for auction, or the foreclosure process has started and is close to being executed, the property is said to be in pre-foreclosure. This can be a great opportunity to buy a home at a huge discount, make a great profit and at the same time help someone avoid having a foreclosed home or property on his or her credit report for 7 to 10 years. This could be a win-win for all.

Properties that are in pre-foreclosure get there for the same reasons that foreclosed properties do. People hit unexpected financial problems – loss of job, health issues, divorce, overspending or maybe even just the fact that an adjustable rate mortgage went up a few points and the homeowner can’t afford it anymore.

In some cases, a homeowner will try to refinance but if there is not enough equity in the home or the person cannot prove to the bank how or even if they can refinance they can make the payments this may be impossible.

**Tip: Equity is what the property is worth minus the amount owed on it. If the balance is $50,000 on a $150,000 home, then the owner’s equity would be $100,000.

Often if there is no other choice, owners who cannot make their mortgage payments or refinance their property will have to let their property go to the bank of lien holder.

Owners who are in trouble may also panic. They are so anxious to sell their home before it gets foreclosed on that they rush to put the property up for sale, even though they may be very inexperienced in the real estate market. Because they are inexperienced, they may price the property too high or too low. If the property needs to be fixed up, it can be even hard to find a buyer for it, especially if the ownes are in a hurry.

Unfortunately, there are property owners who are in denial and maybe I would be as well. They can’t believe this is happening to them, so they don’t even try to do anything about it. Eventually they lose their homes to foreclosure and are forced to leave.

For more information please visit: http://www.floridalawattorney.com

Whenever you deal with a mortgage you need to remember some very fine points that banks would like you to forget. They act in their best interests, and not in your best interests.

1. Is There Anything You Can Do To Avoid the Potential Issues A Bank Can Force On You With These Changes In Your Loans?

Well yes there are a few things you can do to take care of yourself and ensure things remain in your best interests. If a plan is presented to you by your bank you have a few options. One is researching online and finding out anything you can on whatever they may be trying to switch with your loan. If you are not fond of the internet research idea, you can always find blogs from financial folks who either have a background or at least key interest in it to at least know the questions you should be asking, and if all that fails, seek out a financial professional from either another bank or financial institution and just ask him the questions you have.

Never let someone ever tell you what’s best for you. You need to decide what is in your best interests, but only do so when you are fully informed. Do not go in with one source of information or advice, get several. You don’t need to sound like an expert on the subject, nor do you need to take any courses to be properly informed. You just need to ensure that you are not being taken advantage of and being backed into a corner that you will never get out of.

You want to avoid foreclosure at any and all costs if possible in any way. If foreclosure happens, you will in fact have a very hard time getting loans, financial assistance, and loss of your good name. You can recover from foreclosure but it can and will take a very, very long time.

2. Are There Any Solutions To These Problems?

Yes, instead of foreclosing or accepting one of these ludicrous loan modification offers that will do nothing more than delay the inevitable or even cause the situation to become far worse than it was in the first place. You need to look up the pros and cons of Short Sales and decide if they are right for you, and if you think they have potential, gather the information and take it to your local financial institution, and if they cannot process or offer this service, the internet has a vast resource web, you would easily be able to find someone within your general vicinity that offers it!

How Can A Short Sale Prevent A Foreclosure?

My favorite solution to avoiding a foreclosure is a Short Sale. A short sale is the process where we negotiate with the lender to have them accept a lower payoff amount than the original balance of the loan. Say you have a house that was appraised in the hay days at $300k that is now worth $150K (very common!) and that you have a loan of $270K We will sell the home for $150, negotiate with the lender for them to forgive $120K and to waive deficiency judgment for the forgiven amount!

Only in America, this is possible! A great way to get rid of the debt and to start anew, without staining your credit ratings.

For more information please visit: http://www.floridalawattorney.com

Financial distress is a legally declared state in which an individual or business is in a financial crisis. There are alternatives to this situation, also known as bankruptcy. Among them is the individual voluntary agreement in which the debtor makes an agreement on how to settle the debt. The other option is the fast track individual voluntary agreement in which case the case can be nullified.

There are actions that are considered bankruptcy offenses when committed while one is still under financial distress. One of this is borrowing money while still under insolvency without letting the lender know that you are insolvent. One is also not allowed to operate a business under a new name without revealing the original name under which they became financial distressed. One cannot also act as a director of a company in cases where they have been declared insolvent.

Other insolvency offenses include gambling, not keeping proper records on financial affairs and getting money for trade from lenders with no intention of paying even when its clear that the borrower cannot pay. Other offenses include not cooperating with the court officials or failing to take a court summon seriously. It is also considered a criminal offense in cases where the debtor pays some creditors over others before the court has issued a discharge.

If the debtor decides to hide some of the assets so that they cannot be taken over by the court, they risk being charged in court for this offense. Bankruptcy offenses may lead to the period within which a discharge may be given to be extended to fifteen years. Normally a discharge order which relieves the debtor from responsibilities towards the property is issued after one year after filing a petition.

For more information please visit: http://www.floridalawattorney.com

The term “short sale flip” has started cropping up more and more in real estate investing circles, on blogs, and in the news. Surprisingly though, some have attached a negative connotation to the term, which is odd given the fact that the process is quite straight forward, and is probably one of the best ways for the four key players (property owners, real estate agents, investors, and home buyers) to make the best of a bad market situation. Read on for an explanation of how short sale flips can be used effectively as a positive alternative to foreclosure for people and families in distress, and to generate profits for real estate agents and investors.

The Basics

A short sale flip occurs when an investor purchases a property, pre-foreclosure, from an owner via a short sale and then resells the property to an end user buyer for a profit. The process involves four principal players: property owners facing foreclosure, real estate agents interested in helping families while improving their business in a down market, home buyers looking for a great deal, and investors interested in helping families while improving their businesses. Done right, the process is a win-win-win-win for all concerned.

Short Sale Flips From the Owner’s Perspective

A property owner facing foreclosure has likely exhausted all options prior to considering a short sale:

• Tried to sell the property conventionally – either through a real estate agent, or “for sale by owner.”
• Tried to renegotiate the loan terms with their lenders (loan modification).
• Tried to refinance.

So there they sit, alternatives exhausted, waiting for what to them seems to be an inevitable foreclosure and all of the anguish, credit damage, and self-esteem issues that go along with it.

They realize that they owe more than the property is worth, so they understand that no matter what happens they will not be recouping any equity on the property. They just want to be able to walk away, without a foreclosure on their record, and with as few financial repercussions as possible.

Short Sale Flips From the Real Estate Agent’s Perspective

A conventional short sale, as opposed to a short sale flip, can, and usually is, a nightmare transaction for most real estate agents (Notice that I said, “most,” not, “all” – a small percentage of conventional short sale transactions do go smoothly and quickly, so please don’t take offense if you’re one of the less than 10% of agents who has had great success doing short sales).

I’ve heard the statistic, from various sources, that as few as 15% of offers generated via conventional short sale transactions actually close. Think about that – that means that 85% of conventional short sale deals fall apart and the property owner ends up in foreclosure anyway! This is bad for the property owner and bad for the real estate agent who has undoubtedly spent months trying to hold things together, all to no avail!

Why do these deals fall apart? In a nutshell, because:

• Most agents are either inexperienced in the nuances of short sale negotiations, or just don’t have the massive amounts of time necessary to nurse these deals through to closing.
• Lenders often take an extraordinarily long time (try 4-8 weeks on average) to even respond to offers, let alone begin negotiations in earnest.
• Distant lenders often have very unrealistic expectations of local property values, which can render meaningful negotiations impossible.
• Lender short sale departments are often so overworked and under-staffed that documentation often goes missing, turnover is high, files are often reassigned – all of which means that a case that may have been ongoing for months, can suddenly be placed at the “end of the line” and start all over again from the beginning.

Is it any wonder that a great majority of conventional short sale buyers “walk” and most short sale deals fall apart?

The beauty of a properly executed short sale flips is that the real estate agent is part of a team of skilled specialists, each with a specific role, expertise, and incentive to see that the transaction gets done, and because an offer is presented to the lender at the exact same time the property is listed on the market, the timelines and response times are typically decreased dramatically over conventional short sale transactions.

Short Sale Flips From the Investor’s Perspective

A real estate investor want to make a profit on their deals. The only way they can do that is to ensure that there are ready, willing, and able buyers for the investment properties they purchase (we are not talking about landlords here, but resellers). The way to ensure a steady pool of ready, willing, and able buyers is to provide quality and value in the properties that are being sold, i.e.: a great price!

Here’s what an investor doing short sale flips the “right way” does:

• They have a team of specialized negotiators, valuation experts (called BPO Agents), and real estate agents that they work with consistently, each having a very specific and limited role in the transaction.
• Through their real estate agent partners, they identify property owners at some stage in the foreclosure process and offer to purchase the property. They fully explain that the property will be resold for a profit and that by law, because the property is worth less than is owed the lender, the property owner cannot receive any of the funds from an eventual sale, but can likely stop the foreclosure, and quite possibly avoid any deficiency judgment.
• In conjunction with their negotiator and BPO Agent, simultaneously negotiate with the lenders to get a realistic wholesale price, while also marketing the property to the general public at a fair, low-retail price through their real estate agent.

In this scenario, professional valuation experts and negotiators are dealing with the lenders and the real estate agent is left to do what they do best – identifying prospective sellers and then marketing properties to ultimate buyers.

The property owner is assured that the best and most qualified people, those with the time and experience to deal with the almost daily lender follow-up that’s required, are working the case. Since they fully understand that they owe more than the property’s current value, their primary concern is the avoidance of foreclosure and a deficiency judgment -they know that a foreclosure is the worst possible outcome, so they just want out.

The investor seeks to make a fair and honest spread between the negotiated price with the lender(s) and the ultimate sale price to the end-buyer. Remember that out of the spread the negotiator, BPO Agent, and real estate agent must be paid, as well as the closing costs for two transactions (the purchase from the owner, and the resale to the ultimate end buyer) – only then can the investor see a profit.

Please do not confuse a properly executed short sale flip with one of the many scam methods for doing what appears to be the same thing, but which are really quite different. Note that when done properly and ethically:

• The investor NEVER charges any fees to the property owner, or asks for any money whatsoever – the transaction costs the property owner NOTHING!
• The investor does not keep the property off of the market, burning up precious time as the “foreclosure clock” ticks on – the property is aggressively marketed at a low-retail price to the general public from day one!
• The investor NEVER asks for a deed up front, locks the property up in a land trust, or in any other way does anything potentially detrimental to the property owner facing foreclosure.

In the end, an end buyer is found who gets the property for a great price, the original property owner avoids foreclosure and most possibly a deficiency judgment, and the investor (and team) makes a fair profit. Done correctly, a short sale flip is the smoothest, fastest and most ethical way to complete an inherently difficult process – it is a win-win-win-win for all parties concerned.

For more information please visit: http://www.floridalawattorney.com