A deed in lieu of foreclosure is used to convey ownership in your unwanted property to your bank or lender in order to halt the foreclosure process. Its end-result closely resembles that of foreclosure, but without the lengthy and often costly process. In a Gainesville a deed in lieu of foreclosure means you transfer ownership of the property to the lender, in exchange for the cancellation of the debt. There are certain pros and cons to consider when entering a deed in lieu foreclosure. Deeds in lieu of foreclosure can impact your taxes and your credit score in many ways:
How it Affects Your Credit Score
Giving up your property with a deed in lieu helps you relieves financial pressure that filing for bankruptcy and going through foreclosure entail. Months of missed payments that lead to your mortgage to a default setting can already diminish your credit score, more so when it leads to the foreclosure of the property. However, creditors may consider a deed in lieu as less severe than a foreclosure on your credit score.
How it Affects Your Taxes
When it comes to taxes, a deed in lieu may incur tax consequences because of the deficiency or the amount unrecovered, after the property's sale. Forgiven debt is viewed by the IRS as income. In turn, they may tax you after the fact. You May however be eligible for the insolvency exemption. We recommend you speak with a Tax Attorney before agreeing to a Deed in Lieu of Foreclosure. The Law Office of Justin McMurray does not provide Tax advice.
Deeds in lieu of foreclosure in Gainesville offer great advantages, but they are often hard to acquire because most lenders would rather take money from a short sale than add another property to their foreclosed home inventory. They also prefer loan modifications, which allow a change in the loan terms, but require the borrower to begin making payments again. Most lenders also require property owners to put the home on the market first, before offering a Deed in Lieu.
You can discuss your Deed in Lieu of Foreclosure options with our Gainesville Bankruptcy and Foreclosure lawyers here at The Law Offices of Justin McMurray, P.A. Call us now for a free consultation or fill out our online form to get started on your road to debt recovery. We can help you avoid, stop, and find alternatives to foreclosure.