Mortgage Debt Forgiveness Survives Fiscal Cliff Settlement

In a last minute – okay, more like a “well after the last minute” deal struck by the US Congress, a key provision protecting borrowers losing their homes was extended for one more year. The Mortgage Forgiveness Debt Relief Act of 2007, which technically expired on December 31, 2012 was extended to December 31, 2013 as a part of the legislation approved yesterday to pull us back from the “Fiscal Cliff.” For those not familiar with the Act, under normal circumstance is a debt owed is forgiven by the lender, it results in a taxable event for the borrower. By way of example, if I borrow $1,000 from a lender, and I don’t pay it back AND the lender agrees to forgive that debt, I am deemed to have “forgiveness of indebtedness income” which is generally subject to being taxed. However, as will all things “tax,” there are loopholes. Bankruptcy…

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Bank Of America Halts All Foreclosures – Breaking News

**BREAKING NEWS** Today, Bank of America announced that it is temporarily suspending all residential foreclosures in all 50 states to allow then to further investigate reports of widespread fraud in the mortgage loan servicing industry’s handling of foreclosures. This represents a giant leap forward for consumers who have for years complained that mortgage loan servicing companies have ignored all laws related to mortgage underwriting, servicing and foreclosure. In recent days, several mortgage giants – GMAC, its parent Ally Bank, Chase and PNC have all voluntarily suspended foreclosures, but only in states where judicial foreclosure is required. Bank of America appears to be the only bank who has ceased all foreclosure activity pending its own investigation [more . . .]

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As The Economy Grinds, Bankruptcy Just Got Harder . . .

Under the BAPCPA (the 2005 Amendments to the Bankruptcy Code), to file Chapter 7 bankruptcy, a debtor must pass a test. The test is in some respects very simple, and in others very complex. The very first step (which can be relatively easy) is to compare a debtor’s income to the median income for the State in which they live. These “median income numbers” are published by the Federal Government, and are adjusted annually. Come November 1, 2009, for the first time since the law was implemented, the median income for most states is going down [more . . .]

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