Lenders Suspend Foreclosures for Holidays, But Bankruptcy Offers Lasting Solution

Perhaps the only thing worse than facing foreclosure is facing foreclosure over the holidays.

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In an effort to relieve stress for troubled borrowers, mortgage giants Fannie Mae and Freddie Mac have agreed to refrain from repossessing homes from the third week in December through Jan. 3, according to CNN. Bank of America will also postpone its foreclosure evictions through the holiday season.

But while it may seem like an early Christmas present for delinquent homeowners, it's important to remember this is only a very temporary solution.

Banks will continue to conduct pre- and post-foreclosure activities. So while you might not be kicked out of your home this month, you could still receive a foreclosure notice or have your house scheduled for auction.

Millions of homeowners in the U.S. are either underwater on their mortgage, unable to afford mortgage payments or a combination of both.

As our bankruptcy lawyers reported last week, an expiring tax exemption could make matters worse by creating impossibly high bills for borrowers facing a foreclosure, short sale or loan modification.

If the law does indeed expire on Jan. 1, homeowners would owe income taxes on the portion of a mortgage debt written off by the lender. For instance, if you hold a mortgage for $250,000 and your home were to sell in a short sale for $200,000, the IRS would count the $50,000 difference as taxable income.

If you want to give yourself a present this holiday, make it the gift of real financial relief. Bankruptcy is the single most powerful tool for avoiding foreclosure, getting out of debt and regaining financial control.

If you're falling further and further behind on mortgage payments, filing for Chapter 13 bankruptcy has the ability to stop foreclosure and collection proceedings - not just during the holidays, but for good.

After filing, you'll be able to work out a plan to pay down debts in affordable installments. Meanwhile, unsecured non-mortgage debts like credit card debt or medical bills may be reduced or eliminated entirely.

For those with crippling credit card debt and little income, Chapter 7 bankruptcy may be the best solution.

While often thought of as a last resort, bankruptcy is actually the only guaranteed way to relieve debt and retain valued possessions like your home. Our expert bankruptcy attorneys have helped thousands of families eliminate debt and rebuild their finances for a happier New Year.

Don't wait until you're about to lose your home to the bank! Contact DebtStoppers today to schedule a free personal one-on-one debt evaluation with one of our bankruptcy lawyers. We'll help you find the best solution for your individual financial situation.

More Entries:

Losing a Home to Foreclosure Could Mean Big Taxes If Exemption Expires in January: November 28, 2012

Consumer Credit Card Debt Increases Headed Into Holiday Shopping Season: November 23, 2012

Additional Resources:

Fannie and Freddie Halt Foreclosures for the Holidays, by Les Christie, CNN Money

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