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Extension of mortgage debt relief law backed by Senate panel

Chattanooga homeowners who are facing financial challenges and struggling to pay their mortgages may get some good news. A Senate panel has backed an extension of the Mortgage Forgiveness Debt Relief Act through 2013. The act provides debt relief for homeowners by allowing them to write off their debt balances through loan-modification agreements. It was scheduled to expire in December, which would mean that debtors who had gone through foreclosure or bankruptcy would have to pay huge amounts in taxes on the amounts that had been forgiven. For consumers that have worked to eliminate debt, this would cause even more financial difficulty.

Millions of families who are struggling to prevent foreclosure or going through foreclosure are affected by the debt relief law.

Consumer bankruptcy and the relief incurred are sometimes the only choice that a family has in order to survive and get back on their feet. This allows those with financial challenges to arrange an affordable repayment plan to reduce or eliminate debt in order to start over with a clean slate. Oftentimes, personal bankruptcy comes about because of debt incurred by medical bills or loss of a job. Bankruptcy can also help prevent foreclosure and allow a homeowner to keep his or her home.

The bill will now move through the full Senate and would also extend tax write-offs for mortgage insurance premiums as well as energy-efficiency tax credits available for remodeling and construction of homes. As a whole, the Mortgage Debt Relief Law will help millions who are struggling to get back on their feet.

Source: Los Angeles Times, "Senate panel backs extension of mortgage debt relief law," Kenneth R. Harney, August 12, 2012

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