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Debt Settlement Part 2: Two Real-Life Examples of Creditors Accepting Much Less Than The Total Balance Owing

Seattle Short Sales - Thursday, March 13, 2014

This article is Part 2 of a two-part series on debt settlement. In the first article, we looked at the differences between debt consolidation and debt settlement. In this second article, we examine two recent cases of clients whose debts we have settled by convincing their lenders to accept thousands of dollars less than the balances owing.

Here are two recent cases where we settled our clients’ debts for less than the total amount owed (their names have been changed). The first case involves a $58,000 unsecured debt resulting from the deficiency owing on a second mortgage following a short sale.

David was diagnosed with a degenerative medical condition that would require multiple costly surgeries. He knew he would not be able to continue to pay the mortgages on his Seattle home, and we assisted him in avoiding foreclosure by negotiating a short sale with his lender.

Following the short sale, Wells Fargo relieved him of having to repay the $95,000 deficiency balance remaining on the first mortgage. But Wells Fargo refused to forgive the deficiency balance on the second mortgage, leaving David with with a $58,000 debt on a home that he no longer owned.

He met with a bankruptcy attorney to investigate the possibility of filing bankruptcy. Then he came to us, and met with our debt settlement attorney. Our attorney offered Wells Fargo a cash payment of $8,900 to settle the debt permanently, and Wells Fargo accepted!

Our client was able to permanently settle his financial obligation by paying only 15% of the total $58,000 owed. Without resorting to bankruptcy, he was completely absolved of any further debt relating to the home that he’d had to give up, and able to direct his attention to the future and to raising his young family.

Our second case involves a judgment lien. In this case, our client wanted to do a short sale, but she could not get the sale approved because she had an old debt that had been sold to a debt collector who had placed a lien on the home.

Maria was successfully self-employed when she purchased her home in Lynnwood, WA. However, between the slow economy causing a substantial reduction in her income, and a recurring illness that forced her to take time off work and pay for a surgery, by the end of 2012 she realized she would no longer be able to afford her mortgage payments.

She wanted to avoid foreclosure by negotiating a short sale with her lender. However, an old debt that she had had for $5,500 had been sold to a debt collector, and they had placed a lien on her home. She could not sell the home unless that lien was released.

We negotiated with the debt collector, and they agreed to accept $3,000 as full and final settlement of the debt. The lien was lifted, Maria was able to sell her home, and she was relieved of ever having to repay the remain $2,500 owing to her creditor.

Seattle Short Sales has a team of experienced and successful real estate specialists dedicated to working with distressed homeowners. We close, on average, 12% of all short sales per month in King County. In the last 24 months, we have negotiated over 756 short sale approvals, and discounted over $81 million of mortgage debt for distressed homeowners.

In addition to our short sales negotiators, our team includes dedicated professionals advising and advocating for homeowners in the fields of: loan modifications, bankruptcy, debt settlement and collection defense. As part of our service, we offer unlimited attorney and CPA consultations.

If you are a homeowner who is struggling to make ends meet, and would like to learn more about the options available to you, please go to: http://seattleshortsales.com/homeowners/

You can also contact Lambros Politis on Google+ or to find more up to date information on this subject, go to theArk Law Group Blog. 


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