Home in foreclosure, moving to another state, what are the chances they will try to collect shortage?

April 28th, 2009 | by admin |

I'm from MA, moving back there after losing my home in RI. I know that MA has a provision to prevent recovering shortages on foreclosure sales. I don't think that exists in RI. As a MA resident, will they be able to pursue me there for judgment? What is the likelihood they would try to recover when I have no assets, no property and very poor credit. Thanks.

You're correct. RI allows for deficiency judgments. How likely? It depends on factors unknown — how big is the deficiency, what are your future earning prospects, how easy is it to obtain a deficiency judgment, etc.?

The real matter for you is that they will 1099 you for the amount of debt that is forgiven, and some portion of the debt may be taxable income.

  1. 8 Responses to “Home in foreclosure, moving to another state, what are the chances they will try to collect shortage?”

  2. By hlbntleather66 on Apr 28, 2009 | Reply

    Don't bet on it.Do you have a job??
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  3. By Worldly25 on Apr 28, 2009 | Reply

    Yes they can come after you. Where you move to has no bearing on your debt. The lenders will just get a judgment against you and at some point will garnishee your salary. So it would be better if you dealt with the lender and worked out a payment plan
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  4. By al t on Apr 28, 2009 | Reply

    it doesn't matter….the IRS will deem the short sale loss as a taxable entity on your income taxes….you deserve it, you deadbeat.
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  5. By ednolb on Apr 28, 2009 | Reply

    They don't come after you- you will get a tax notice and you will have to pay taxes on the amount they lost and wrote off for you.
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  6. By zeuz on Apr 28, 2009 | Reply

    You're correct. RI allows for deficiency judgments. How likely? It depends on factors unknown — how big is the deficiency, what are your future earning prospects, how easy is it to obtain a deficiency judgment, etc.?

    The real matter for you is that they will 1099 you for the amount of debt that is forgiven, and some portion of the debt may be taxable income.
    References :

  7. By Antacid on Apr 28, 2009 | Reply

    You will be hounded for life. If a law doesnt exist today, it will next year and they will get you. They may try several different avenues such as going after your inheritance.
    You have to understand what you learn to avoid today, new laws are made to take money from you tomorrow. DONT EVER FEEL SAFE RUNNING TO RI.
    Even if they cant pursue you to the point of judgement right now, that doesnt mean they cant harass you to eternity and beyond. These pricks do this for a living, they are relentless. It may involve court dates and you blowing money on a lawyer just to prove the laws already in place. They wont back down. Trust me.
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  8. By TheOtherChris on Apr 28, 2009 | Reply

    With respect to owing Federal taxes on the deficiency, most of the information given by others is out of date.

    "The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief.

    This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion doesn’t apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

    The amount excluded reduces the taxpayer’s cost basis in the home. More details. Further information, including detailed examples, can also be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments."
    References :
    http://www.irs.gov/newsroom/article/0,,id=174034,00.html

  9. By Mike on Apr 28, 2009 | Reply

    Lydia,

    If you really want to screw the bank over and delay this process for months or even years….make the lender "produce the note" on your mortgage. Chances are it's lost with all the mortgage shuffling.

    Email me for details.
    References :

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