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14 Aug 2012

Taxing Decisions: The Time to Address Colorado Springs Foreclosure is Now

For the last five years, Congressional intervention has meant that underwater homeowners wouldn't face tax penalties when a portion of their debt was forgiven upon foreclosure.

However, Colorado Springs foreclosure defense lawyers know that protection is set to expire at the end of the year.

This means if you're on the verge of foreclosure, the time to seek help is now. If it ends up not being worthwhile to stay and fight for your investment, you could end up paying tens of thousands of dollars in income taxes if you wait until after Dec. 31, 2012.


In most cases, if you have a good attorney, you can save your home by negotiating a significant reduction on your principal payment through a loan modification. This is going to lower your monthly obligations, making it easier for you to keep up with every month. This is particularly helpful to homeowners who were caught up in the housing crisis, where they purchased their home for far more than what it was actually worth. Reducing the principal balance can bring your payments back in line with what would be considered a fair market value.

However, there are a few situations when it may make sense to initiate what is called a strategic default, which is where you simply walk away from the home and allow the bank to foreclose without a fight. This is rarely advisable because it is so harmful to your credit. However, sometimes it can be worth it when there is no way you'd be to keep up the payments and the bank absolutely won't work with you.

Prior to 2007, the statute was such that if your home was foreclosed upon, the bank had the option of "forgiving" the difference between what you owed and what was paid for the property. However, this "forgiven" amount was deemed income by the federal government - income upon which you had to pay taxes. When the housing crisis hit, Congress stepped in and allowed an exemption, meaning homeowners wouldn't have to consider this income.

What was originally intended to be a three-year relief was extended another two years. But now, it's going to expire. That means if you are forgiven $20,000 worth of the mortgage, you will have to pay taxes on that $20,000 as if it were in your pocket. If you're facing foreclosure, chances are this is money you don't have.

The bottom line is that if you are facing foreclosure, you need to act now so that you can get the matter settled before the expiration of these tax benefits, should you need them.

Stephen H. Swift

Managing Attorney
Law Office of Stephen H. Swift, P.C.

Client Testimonials

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    "My attorney (Matthew Hansen) is a very kind person.  I felt very confident in his skills. He is very knowledgeable and efficient.  He didn't make me feel embarrassed to be filing for bankruptcy.  Thank you Matthew!  Laura was very friendly, and everyone I interacted with was very nice and helpful as well." 

     

      –  Sherry M., Colorado Springs, CO

     

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    "Steve explained things well so you know what you're doing.  The staff was very helpful with everything, including the paperwork." 

     

      – Raymond & Rhonda P.,                         Colorado Springs, CO

     

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    "From the first time that I entered the office, I was treated with the utmost respect. It was like I had been knowing all of the employees for years!! Every person that I came in contact with was extremely courteous!!!

    I rate my overall experience a 12!! And I wouldn't change a thing on the website.

    Cris is absolutely wonderul!! While Alicia was extremely courteous and humorous!!!  Stephen (Swift) was extremely professional and courteous. One of the nicest gentlemen that I have Had the pleasure of working with. I can't thank him enough."
        

      – Pete, Colorado Springs, CO  

     

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    "Upon my first visit to the office, I was in an unfamiliar part of town.  I was also bewildered and experiencing anxiety.  I was not even sure I should be there or how to proceed in a very new situation where my back was against a wall.  The first person I met in the office was the lovely receptionist.  I have to say that she has the absolutely right demeanor and is extremely successful in her position.  She has a slight but comforting smile and persona.  She is confident but not arrogant in processing the needs of clients.  I do not feel that this is a small achievement in any way.  I feel this person in many ways sets the tone for the office as the gate keeper of the office and emotional clients.  She definitely helped me thru this process with her silent and dedicated service to me, the clients and the office."

     

    John C., Colorado Springs, CO

     

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    "Upon entering Steve's office, one immediately knows they have entered his "zone".  Steve will talk, think, contemplate, then act.  He then spins his chair around, garbs paper, types on the computer and zaps something thru the printer.  Occasionally, a document needs to be scanned or something else from outside the office is needed, and Zap someone appears without having to yell down a hall or call out.  There is definitely a team here that is in sync.  There may be a question out of the blue suddenly or a brief conversation about something else.  The whole time, Steve is on point.  I felt from day one, a trustworthy confidence in placing my future in his hands.  I was not wrong.  I also never once felt rushed, brushed off or that my concerns were not his.  I felt that Steve is in this for me and his clients.  I have a debt, gratitude and confidence in Steve and the Swift team that far exceeds the fees pain." 

     

      – John C., Colorado Springs, CO

     

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    "Thank you to everyone who worked on my case.  My driving priviledges are now restored and I have a fresh start.  I am very grateful to the Swift Law Firm!   Everyone was very kind and helpful and easy to talk to.

    Ward was very knowledgeable and knows the pros and cons of your case. Definitely a man to listen to concerning your case, and he was very helpful!

    Matt Hansen is a good man, very helpful, gives good advice  AND he is willing to go the extra mile.  Steve Swift is a man of action who knows his profession.  He lifted a heavy burden, and I cannot thank him enough for an excellent job!"  

     

      - Henry R., Colorado Springs, CO  

     

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