Posted: March 8th, 2011 | Author: Joe | Filed under: Debt | Tags: celebrity, foreclosure, JaMarcus Russell | No Comments »
I don’t know if this is a sign of the times, or more just a commentary about how money alone does not solve problems, but JaMarcus Russell is facing foreclosure on his $2.4 million mansion.
According to TMZ:
” If he doesn’t pay the $195,512.05 he owes in the next three months, he’ll lose the house.”
This is a guy who signed a $32 million guaranteed contract in 2007, and now he’s broke? Well, he’s behind on his mortgage payments. The article doesn’t say he’s going bankrupt. So he either cannot afford his lifestyle, or he’s choosing to walk away from his mortgage obligation. One is the result of poor financial skills, while the other is irresponsible.
It’s probably a little bit of each. He could probably cough up enough to pay the mortgage, but he just doesn’t want to. Still, it never ceases to amaze me how celebrities can blow through millions like it’s chump change and squander an opportunity most Americans would do almost anything for.
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Posted: March 15th, 2010 | Author: Joe | Filed under: Debt, Economy | Tags: Bankruptcy, Credit Cards, Debt, Economy, foreclosure, UnEmployment | No Comments »
Could you live off the rewards points and frequent-flier miles you’ve racked up on your credit card over the years? This man is. He’s a former executive from Southern California who’s become homeless since the bottom fell out of the economy in 2008.
He’s so far managed to keep his food bill to around $5 per day, and stays in hotels from Holiday Inns to Motel 6′s for the free breakfast and free Internet access.
It’s pretty amazing when you stop and think about it. He’s not entirely destitute, since he still drives a leased BMW and still has some savings, but it’s a testament to how far a person can stretch a dollar with a bit of creativity and the need to do so.
He’s gone from $120,000 plus bonus a year, living in a condo to bankruptcy, foreclosure and a keeping all his worldly possessions in a storage unit while he floats from hotel to hotel.
Click the image to view the video, compliments of KCBS.com.
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Posted: February 2nd, 2010 | Author: Joe | Filed under: Economy, Real Estate | Tags: Economy, foreclosure, Housing, Mortgages, news, Real Estate | No Comments »
According to this article from the AP, new home sales fell 7.6% last month.
The Commerce Department said December sales fell to a seasonally adjusted annual rate of 342,000 from an upwardly revised November pace of 370,000. Economists surveyed by Thomson Reuters had forecast a pace of 370,000 for December.
It’s mildly surprising given that the home buyer tax credit was still in effect at that time, but it could be due to a lag. It usually takes about 2-3 months to finalize the purchase of a home from the initial offer to the closing date and it could be that new home buyers at stopped looking by early November, when the tax credit was originally set to expire. If this is true, then we could expect to see a jump in new home sales in the January/February time frame.
I suspect the big reason however is that unemployment remains near historically high levels, and people simply don’t have or cannot plan to have the required, steady income needed to be able to afford a home.
The article never really mentions or even speculates about a reason for the ‘unexpected’ drop.
:-/
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Posted: September 14th, 2009 | Author: Joe | Filed under: Debt | Tags: Debt, foreclosure, mortgage debt | No Comments »
Before The Mortgage Debt Relief Act of 2007, you would owe taxes on any amount of debt that was canceled or forgiven. The Mortgage Debt Relief Act allows those who cancel or reduce mortgage debt through mortgage restructuring or foreclosure to avoid paying taxes on the amount forgiven. It’s a good thing too – Can you imagine the psychological and financial blow this would be for the millions of homeowners losing their homes to foreclosure today?
The act covers up to $2 million (or $1 million, if filing separately).
Cancellation of Debt.
The IRS defines the cancellation of debt as any money borrowed from a commercial lender that is later forgiven. Outside the coverage of the relief act, you would have to declare this debt for tax purposes.
“When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C”
When Cancellation of Debt income is not taxable.
Here are some of the most common situations where you would not owe taxes on the canceled amount:
- When the canceled debt is covered by the The Mortgage Debt Relief Act of 2007
- Debts discharged through bankruptcy
- When the total debt is more than the fair market value of your total assets (insolvency), some or all of the canceled debt may not be taxable.
- If the debt was due directly to the operation of a farm and more than half your income from the prior three years was from farming and the loan was owed to a person or agency regularly engaged in lending, your canceled debt is generally not considered taxable income.
Type of Debt Covered by the Act.
The Mortgage Debt Relief Act applies only to debt used to purchase an existing home, build a new home, or substantially improve your primary residence, or to refinance debt incurred for those purposes. The debt must be secured by the home, and the maximum amount exempted by the act is $2 million or $1 million if married filing separately.
The Mortgage Debt Relief Act of 2007 is in effect until 2012, and more information can be found here.
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