The End of Foreclosure Mediation

Delaware County homeowners are going to be greatly impacted by the discontinuance of the Delaware County Common Pleas Court’s Foreclosure Mediation Program.  Effective January 1, 2013, the program will no longer be offered for new foreclosure cases.  Mediation will still be offered for cases filed on or before December 31, 2012.  And cases already referred to mediation will continue until the mediation has concluded.

For nearly four years the Delaware County Common Pleas Court has offered a Foreclosure Mediation Program.  The program was started in response to the Supreme Court of Ohio’s “Save the Dream” initiative.  The goal was to give homeowners an opportunity to try and work things out with the lender.

Under the program homeowners were provided with a packet they could easily fill out to request mediation.  They did not need an attorney to complete the packet.  The Court freely granted requests for mediation.  And there was little to no cost to the homeowner.

Like most imposed mediation programs the success is going to vary.  Homeowner’s still needed to be in a financial position to make payments.  Lenders needed to be willing to try.  And both parties needed to compromise.

With the end of the Foreclosure Mediation Program the foreclosure process will move much faster.  Homeowners will need to act quickly if they wish to remain in their homes.  They will no longer be able to file a quick motion and gain an extra 30 to 60 days in their home.  They will also lose opportunities to investigate modification options that typically came out of the mediation process.  The end of foreclosure mediation in Delaware County will have a big impact on homeowners.

Income Taxes After Your Home Foreclosure

You may have to pay income taxes after your home foreclosure.  Currently many can escape foreclosure with just the loss of their home.  Starting in 2013 foreclosed homeowners may also be paying taxes to the IRS on the forgiven debt.  Most tax debt is not dischargeable.

Current federal tax laws generally do not tax consumers for forgiven debt from home foreclosures.  The current law will expire at the end of 2012.  If the law is not extended, many consumers will pay federal income taxes on forgiven foreclosure debt.  Think paying taxes on an extra $30,000 to $100,000 of income.

Mortgage modifications were supposed to help.  I have seen very few success stories.  You make too much money or you make too little money. Sorry, but thanks for trying.

The only real mortgage relief is Chapter 7 Bankruptcy.  Take care of the mortgage debt.  Avoid paying taxes on forgiven debt.  Clean up your other debt at the same time.

The Bankruptcy laws have been around longer than the current tax law.  Rely on a remedy that has staying power.  If you are in a current foreclosure you need to act fast.  Contact a local Bankruptcy Attorney to learn more.  Don’t pay income taxes after your home foreclosure.