California Mortgage Forgiveness Debt Relief Law

The California mortgage forgiveness debt relief law went into effect as soon as it was signed. There are many ways that it is the same as the federal laws, but there are also differences that people should know about. The amount of qualified debt is limited to $800,000, and the amount of debt relief is limited to $250,000. It also only covers debt that is forgiven in 2007 and 2008, whereas the federal law is designed to cover forgiven debt all the way through 2012. The amount of qualified debt is higher through the federal laws, and there is also no limit to the debt relief.

For people who are filing their tax returns of amending them, any qualified debt or debt forgiveness that is higher than the California law amount must be entered on the tax form. With this in mind, those who have debts that fall into this category will want to pay special attention to how they do their taxes so that they can be sure they have provided the proper information. People who do not do so, can end up with tax liability problems in the future, and they would likely much prefer to avoid these.

Mortgage forgiveness and debt relief are going to become more common in California and in many other states, and the numbers of people who must deal with this new law have already seen a dramatic increase. The housing crisis and the subprime mortgage market were large problems for people in states with a higher cost of living, and California was one of them.

Many people there got their mortgages when they were inexpensive and banks were lending to almost anyone, but they were variable interest rates, and the rates went up dramatically. While no one was immune, those who were living beyond their means in states like California were struggling more than others to pay their mortgages and survive.

There were a lot of foreclosures and also a lot of debt problems for people who owed a lot of money, and getting some debt relief was sorely needed. Some of these people opted for debt consolidation and credit counseling, but it wasn’t something that everyone needed or wanted to deal with. For those who did have mortgage debt relief through federal laws, the California laws might have been largely ignored, and they will have to be addressed by people who live in that state.