Home loans: I can't believe folks are so dumb

Quote from NasdaqTrader:

Would you have to file for bankruptcy in order to not have to pay the IRS?

Also, wouldn't it make sense that if you get foreclosed on and the home is worth less than the loan balance to just pull out your money from the bank and stick it under the mattress? That way if the lender wants you to pay the deficit or some of the deficit and/or the IRS wants you to pay taxes on the debt forgiven, you can just say you are broke?
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You can't file bankruptcy against the IRS.

Hiding assets to avoid repayment of debt is fraud.

But again, if you're in California, a lender can't sue for a deficiency. That may be true in other states too....they all have their own unique laws and I don't know the laws in all the states.

In states where they can sue for a deficiency, there is a process. First, they take the house back. Next, they have to sell it at a loss. Next, they have to file a lawsuit, serve you, and then win the lawsuit. And THEN they have a judgment against you that they have to collect. You have the option of course at that point of filing bankruptcy.

We haven't seen many lenders chasing borrowers for deficiencies. Most of these cases the lenders understand they are throwing good money after bad to pursue a debt against someone who just lost their house.

OldTrader
 
Quote from OldTrader:

You can't file bankruptcy against the IRS.

Hiding assets to avoid repayment of debt is fraud.

But again, if you're in California, a lender can't sue for a deficiency. That may be true in other states too....they all have their own unique laws and I don't know the laws in all the states.

In states where they can sue for a deficiency, there is a process. First, they take the house back. Next, they have to sell it at a loss. Next, they have to file a lawsuit, serve you, and then win the lawsuit. And THEN they have a judgment against you that they have to collect. You have the option of course at that point of filing bankruptcy.

We haven't seen many lenders chasing borrowers for deficiencies. Most of these cases the lenders understand they are throwing good money after bad to pursue a debt against someone who just lost their house.

OldTrader
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If you can't file bankruptcy against the IRS, how can you (as you mentioned in an earlier reply) claim an exemption for being insolvent?

Is the IRS going to demand the tax payment for the debt forgiven? Is there no way around that? What do they do if you are broke?
 
Quote from NasdaqTrader:

If you can't file bankruptcy against the IRS, how can you (as you mentioned in an earlier reply) claim an exemption for being insolvent?

Is the IRS going to demand the tax payment for the debt forgiven? Is there no way around that? What do they do if you are broke?
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I didn't say you had to file a bankruptcy against the IRS....what I said was that there was an exemption if you are insolvent. Just like you get exemptions for dependent for instance. I don't know the forms involved...I'm not a CPA.

OldTrader
 
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