Here’s a dumb question. If you do a short sell, you potentially are subject to taxes on the debt forgiveness, right? However, if you get foreclosed on, it’s not a taxable event, right? I suspect there’s the other angle of being recourse or non-recourse loan. But if someone truely is broke, is the creditor really going to spend additional money to try to recoup money from someone that doesn’t have any?
If that is the case…For some one knee deep in debt, with with no hope of getting any principle back. Wouldn’t it make sense for the person to not do a short sale and have to pay taxes on a debt forgiveness? I understand that from a credit perspective, it’s a choice between having a ding on your credit versus a a much bigger dent…But the way things are going, it’s not like that person would be alone…It’s going to be so much en vogue anyway. If I was going down, I would go down in one big hairball of flames. And with the 90 day extension, I’d just live there longer.
Again, pardon the ignorance in the question. But someone that is way upside down, what really does a short sale buy him/her?
