Many homeowners in Las Vegas bought when homes were at their peak values. People moved from all over the country to take advantage of all that the city has to offer. Because of the rapid population increase, many homes were built to satisfy demand. Builders had trouble keeping up with all of the people looking to move to the region. Home values increased dramatically, which led to high mortgage payments for buyers.
Homeowners believed that the values would continue to increase, but when the bubble burst, many were stuck with mortgages for way more than their homes were worth. The economic downturn had a crippling effect on the Las Vegas economy, and many people could no longer afford to pay their monthly mortgage payments.
Homeowners were left with few options. Some tried to renegotiate with lenders, in an effort to have lower monthly mortgage payments. Others considered filing for bankruptcy in order to get the time they needed to become current with mortgage payments. When a person files for bankruptcy, an automatic stay goes into effect, and this means that any actions pending against the debtor must stop until the bankruptcy is complete.
Some homeowners let the lender foreclose the property. They would stop making payments, and just walk away from the mortgage. Lenders could then sell the property, usually at a loss, and pursue the homeowner for the remaining debt.
Recently, the Las Vegas area has seen an increase in short sales, another possible option for struggling homeowners. In a short sale, the homeowner sells the home for less than the amount owed on the mortgage. The lender may agree to this arrangement, because it costs a lot of time and money to pursue a foreclosure. In a short sale, the lender does not have to find a buyer for the property, or pay for any upkeep.
Borrowers escape the monthly-mortgage payments, and can focus on finding a more affordable place to live. They also may be released from the leftover debt that is owed to the lender. Additionally, the Mortgage Forgiveness Debt Relief Act was extended another year. This act states that homeowners do not have to claim this debt cancelation as income on their taxes, which will greatly assist those struggling to make ends meet.
If you have fallen behind on your mortgage payments, speak to an experienced bankruptcy attorney as soon as possible to consider your options. If you wait too long to have this discussion, you may be unable to take advantage of some of the opportunities available to reduce your debt. Each situation will have a different resolution, and it is important to speak with someone who can help tailor a solution that is in your best interests.
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