Balita Midweek, Wed. - Fri., September 08 - 10, 2010 W Bankruptcy: Foreclosure or short sale?
ITH a big majority of bankruptcy filers also defaulting on their mortgage pay- ments, many of them are wondering whether they would just let their homes go into fore- closure or sell them through a process called short sale. The answer depends on one’s situation, but generally a foreclosure goes better with bankruptcy than a short sale. We all know what a foreclosure is, but what is a short sale? A short sale is when a lender is willing to take less than what is owed in the home, and allows the home to be sold at a price lower than the mortgage balance. This happens during a depressed real estate market, during which home values are often lower than the loan balance. For example, if you bought a home in 2005 for
$400,000 with a first mortgage of $320,000 and a second mortgage of $80,000, and the value is now worth $250,000 and you have a buyer willing to pay $250,000 for the home, you will seek approval of the lender to short sell at that price. The first mortgage lender will most probably agree because it’s better than selling the foreclosed home in a down market. The first lender will get almost the entire $250,000, and typically the second lender will sign off for a token payment of $5,000. On face value, short sale looks good until problems crop up later. What are these problems? The big- gest setback is that a few months later, you will probably receive a 1099-A or 1099-C that basically tells you that you received income for which you’ll have to pay taxes. While you did not actually get the money, the difference between the actual loan and the selling price is considered taxable income. There are exceptions to this, but you’ll have to qualify.
It is usually better to surrender the home after the bankruptcy is filed. Under bankruptcy laws, the lender walks away from the mortgage without deficiency debt and without the IRS imposing a tax on the deficiency. A short sale can also ruin your credit score because the lender has the right to report to the credit bureaus that you did
Call us today and schedule a free con-
sultation. We have three convenient offices to serve you: Glendale (818) 552-4500; Cerritos (562) 865-4480; and West Covina (626) 262-4446.
BY ATTY. JAMES G. BEIRNE
not pay the loan in full. A short sale has basically the same effect on credit than a foreclosure, and much worse than a bankruptcy. Besides, a foreclosure under bankruptcy cannot be reported to the credit bureaus as foreclosure, but can only report “$0 balance, bankruptcy discharge.” Another advantage in going into bank- ruptcy and foreclosure is that generally, you get to stay in the foreclosed home longer. A typical foreclosure process can take about one year when a bankruptcy is filed, but a short sale can be finished in only a few months. And while nobody bothers you during the foreclosure process, realtors and potential buyers will be looking at your home from time to time.
Most realtors will encourage you to do a short sale even if you plan to file for bankruptcy, but this is expected because they will be earning commission from the short sale. Short sale also has its merits, if you are not planning to file for bankruptcy. But if you have other debt problems, other than your mortgage, I would suggest that you keep off a short sale and just surrender your home after filing for bankruptcy. The final decision whether a short sale or a foreclosure with bankruptcy, as I said depends on your own situation. It would be advisable to consult with a bankruptcy attorney on what is best for you.
Atty. James G. Beirne, a member of the highly respected National Associa- tion of Consumer Bankruptcy Attorneys and an active member of the State Bar of California, has been handling bankruptcy cases for over a decade. His offices are located at 520 E. Wilson Ave., Suite 110, Glendale, CA 91206, and 17215 Stude- baker Rd., Suite 380, Cerritos, CA 90703,
with telephone numbers (818) 552-4500; (562) 865-4480; and (866) 903-4522. He also has offices at 2640 E. Garvey Ave., Suite 104, West Covina 91791, with tel. no. (626) 262-4446.
This article is for information purposes
only, and does not necessary reflect the company’s opinions and views on general issues. We make no warranty, prediction nor representation, nor do we assume any legal liability for the completeness of any information and its effect on any case. Each case is different and results depend on the facts of each case. Consult with and retain counsel of your own choice if you need legal advice. ■
Unilab-USA to celebrate 27th anniversary in Buena Park
THE Unilab-USA of Southern California will celebrate its 27th anniversary on Sept. 18 at the Los Coyotes Country Club at 8888 Los Coyotes Drive, Buena Park, California. Unilab-USA is an organization of former employees and retirees of United Labo- ratories in the Philippines who have settled in Southern California. These former United employees were instilled the Filipino concept of working together that has evolved into a credo called Bayanihan – the glue that has bonded them together in the organization borne of that concept – the Unilab of Southern California USA, fondly called “Unilove.” We have heard of many Filipino organizations in the United States that have disintegrated no sooner than they have organized due to that drawback of the Fili- pino persona – crab mentality, pride ego, self-centeredness. But members of Unilab-USA may be of a different genre. They are bred by the storied Bayanihan value of magtulungan. This must be the reason that Unilab- USA has gone this far. To ensure Unilab-USA continued growth the organization is open for member- ship to close friends and benefactors and children of former Unilab employees. The highlight of the celebration will be a dinner-show entitled “A Dose of Laugh-
ter, the Best Medicine” featuring entertainers from Los Angeles and and Orange County’s communities. To cap the evening will be raffles and ball room dancing. Unilab-USA president Aris Reyes and the officers spread the mat of welcome to all United Warriors and their families in California and Nevada to attend this celebration and reunion.
For more information call Felix 626-839-0736, or Val 818-439-3695, or Aris 951-201-7075. ■
| Page 2
| Page 3
| Page 4
| Page 5
| Page 6
| Page 7
| Page 8
| Page 9
| Page 10
| Page 11
| Page 12
| Page 13
| Page 14
| Page 15
| Page 16
| Page 17
| Page 18
| Page 19
| Page 20
| Page 21
| Page 22
| Page 23
| Page 24
| Page 25
| Page 26
| Page 27
| Page 28
| Page 29
| Page 30
| Page 31
| Page 32