The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: XoFruitCake who wrote (51414)	4/5/2006 12:17:51 AM
From: GraceZ	Read Replies (1) of 306849

HELOCs are recourse loans which means that if you have an income or assets they can be attached in a deficiency no matter what state you live in. You would have to be legally insolvent to have the bank forgive the loan and have it not trigger a taxable event. In other words, the loan forgiveness is taxable income and now you owe the IRS. But then the IRS might settle for some small sum, or they might come take your car and put a padlock on your biz, cash in your life insurance, etc. A lot of scumbags have made themselves judgement proof by putting all their assets in someone else's name, but I figure anyone who would do that for a scumbag with intent to defraud is probably a scumbag themselves and the original scumbag stands a good chance of losing the ill gotten gain to that person skating off with it for someone a lot sexier. The whole scheme is immoral and unethical even if someone could find a loophole that makes it legal. It comes with it's own punishment. I figure if you are going to sell off your integrity for a few hundred grand you might just as well start robbing banks or breaking and entry, maybe insurance fraud (that's quite lucrative I'm told).

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