Simply getting through the ordeal of foreclosure is an enormous task. However, it is important to take steps to ensure your life after foreclosure is a success. If you lose your home to foreclosure, a short sale or a deed in lieu of foreclosure, you will need another place to live when the process is completed. We will help you assess your situation and prepare to move. For example, it is important to set aside money in a savings account during the foreclosure process. This money can be used for rent, the cost of movers and the two-month security deposit that landlords require for people who have been through foreclosure. If you have not saved enough money prior to being forced to leave your home, your options will be extremely limited.
Restoring Your Credit After Foreclosure
In addition, we will help you consider the effects of foreclosure on your credit score. If we address this issue early in the process, we may be able to protect a spouse’s or co-signer’s credit from the damage caused by foreclosure. Depending on the specifics of your case, we may be able to include credit restoration in the settlement with your lender.
The method of credit restoration we suggest depends on each client’s ultimate goal and the option we use to fight foreclosure. If clients want to find a way to get out of their mortgage, we will include as part of the settlement/negotiation a credit resolution with the bank or lender.
When foreclosure resolutions are handled outside of court, as in a loan modification, a short sale or a deed in lieu of foreclosure, we can negotiate as part of the foreclosure dismissal that credit restoration is part of the settlement with your lender. In these cases, we will request that your lender works with the major credit bureaus to remove the foreclosure from your credit report after the dismissal.
There is no question that foreclosure will have a negative impact on your credit rating. However, a qualified attorney can help you in restoring credit during the foreclosure process so you are in better financial shape when it is over. Please give us a call at (312) 775-0980 for a free consultation to learn how we can help you restore your credit after foreclosure.
Will You Be Penalized on Your Taxes for Debt Cancellation?
Canceled debt can be considered income (for tax purposes) in some situations. When a commercial lender forgives or cancels debt, it is required to report it to the IRS on Form 1099-C. When the borrower does his or her taxes for the year in which the debt was canceled, the amount of canceled debt must be reported as income.
However, in an effort to help foreclosed property owners, the Mortgage Forgiveness Debt Relief Act of 2007 allows you to exclude certain canceled debt on your principal residence from your income. In general, the law includes canceled mortgage debt from years 2007 to 2012. There are exceptions to the law, however. You should speak with a foreclosure defense attorney to learn whether your canceled debt is eligible for exclusion. If not properly addressed by a tax professional or attorney, you could be hit with thousands and thousands of dollars owed to the IRS, after losing your home. (IRS debt cancellation information.) The debt cancellation income, also nicknamed “Ghost Income” has specific IRS rules that can be used to avoid this hit to your income tax returns.
Contact an Illinois Mortgage Foreclosure Attorney
At EV Has, LLC, we help clients address all of the issues associated with foreclosure, including what to do when it is over. By starting on these issues before the foreclosure process ends, people are better able to move on. Click Here to email us at inquiry@foreclosuredefenselawoffice.com or call us at (312) 775-0980 today for a free evaluation.