need help

[DY]

Due to unforseen circumstances we are going to have to move and have had our mobile home a little over 2 years. The park rules don't allow for us to rent out our home and the way the market is around here I doubt very seriously we can sell the place, just on our street alone there's 6 homes that I can think of that have been there less time than ours that are for sale or abandoned. What would happen if we have to move before we can sell, we can't afford to pay for 2 places, can we give it back to our lender? I know that would hurt our credit, but the way things are it'll be a few years before our credit is back on track anyway. Any suggestions would be appreciated asap. We're running out of time.

[ramb37]

You did not mention moving the home to a new location. Is that financially out of the question? Moving can be expensive, particularly out of state, but if you are staying locally, it could be a consideration.

You should be able to give it back to the lender (if they will accept it), but as you say, your credit will take a hit for at least 7 years. Also, if the lender cannot sell it for what you owe on it, but sells it for less than you owe, you will most likely have a judgement issued against you for the amount of the difference. When and how that gets paid depends on the credit collection policies of the lender.

[Gayle Linke]

If the lending company doesn't get their money back, they can also decide that the difference between what you owed and what they got can be considered income to you. They will send the information to you on some kind of 1099. Of course, the other copy goes to the IRS!

[Ron Ambler]

If the lender sends you a 1099, they are in violation of the FDCRA, Fair Debt Credit Recording Act, under harassment. While the 1099 would go to the IRS, you can explain the issue and should not wind up owing taxes.

Check out the FDCRA at:

http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm#806

[rmurray]

A few years ago the IRS started to require lenders to report via 1099 all amounts that they charge off...The IRS takes the position that the individual has incurred income and should be paying taxes on the amount...Worse yet most customers never get the 1099 (because the lender is only required to send the notice to the last known address...which of course is the repossed home)..so they usually get a bill from the IRS with substancial penalties and interest a few years later...I have ran into many customers in this sittuation...many of which have gone to tax professionals after they receive the notice...only to find out they have to pay..

Anyone with any reposession or collection over $ 600 should be aware of this and consult a tax professional...

Thanks for the link..It will be useful..but I do not see how this has anything to do with the question..Seldom is this mentioned by collectors...

[Karl]

One thing I would recommend would be trying to sell it "contract for deed." If you require a 10% to 15% down payment, it is not as risky, and you will get a lot more interested buyers. Just put an ad in the paper which says "possible contract for deed." Depending on your area, you will get many calls. You may get some bad risks, but at times you will get people who have fairly good credit, a good down payment, but, for whatever reason, they can';t get a bank loan. Recently divorced people, for example, might be a decent risk, and the more they put down, the less likely they will default. An attorney will draw up the contract for about $300. The buyer pays you the monthly mortgage, and you then mail it to the bank. The buyer has to keep insurance and is responsible for all maintenance, lot rent, and taxes, and you have the right of inspection. Some parks will allow contract for deed, some won't. Sure there is some risk to this, but it is a lot better for you than having your home repo'd and ruining your credit rating. You can always kick them out if they break the contract, clean the place up, and start all over again. It is sort of like renting, without half the headaches, and many parks don't mind.