By Ken Melblock

Change has been the catch phrase surrounding Obama since he began his campaign for president. The theme has been one of many ideas with lofty hopes. He as initiated many programs and made many statements that have all been based on the idea of change and the need for reform. All of which have been prefaced with a phrase that is sometimes overlooked: "This change will take time." Well in a sense he is correct any type of change will definitely take time but this in itself begs the question, " How much time?" The answer to that question is unknown and is one that ironically enough, only time will tell.

The notion that President Obama based his entire campaign and now his entire Presidency on the idea of change signifies that there were negative sentiments coming from the American people about the current situation. More so it was a sentiment based out of desperation to prevail over these hard times. Throughout these difficult economical times many people have begun to struggle financially. Whether its because of a lost job, a medical emergency, losses linked to stock market blunders or simply living outside of their means many people are having problems paying their bills. Personal and business financial situations continue to worsen as debts accumulate and incomes decrease. All of these struggles are signs that our wonderful country is in the midst of an economic recession.

Another option is to get the bank to accept a deed in lieu of foreclosure. In that case, the borrower may have tried unsuccessfully to sell the home (even for an amount less than the outstanding balance of the mortgage). The borrower may offer to the bank to give the home back to the bank, using a deed in lieu of foreclosure, in return for which the bank may "forgive" the balance of the debt above the market value of the home. There have been an increasing number of people who move and leave the keys in the door, abandoning the property, not making any deal with the bank. Sometimes the borrowers have tried to work with the bank, find that they are unable to and that the bank will not offer them any relief. The borrowers find that they cannot afford to pay the mortgage and decide to walk away. The bank may still file suit to legally get the property back and sue the borrowers for the balance.

New legislation also requires an account review every six months if there is a rate increase and a lower rate should the recent payment history remain timely. Once bills are paid on time then the older, lower interest rates will start to be reinstated. If you have balances with different interest rates on the same credit card payment then payments need to be applied to the balance with the highest rate first. Currently, the credit card companies tend to apply payments to the balance with the lower interest rate.

The 2007 Mortgage Forgiveness Debt Relief Act exempts a borrower from as much as $2 million in forgiven debt. There are several catches with this law. First, the debt had to be acquired before January 1, 2009, so any amount of debt incurred after that date does not qualify for the exemption. Second, the amount of debt had to have been used solely to buy, build, remodel or repair a primary residence. If the borrower took money out of the home equity to pay tuition, medical bills, vacations, cars, downpayment on a second home or investment property, that debt is not eligible for exemption. There is a chance that the homeowners could avoid the taxes if they can prove that they were insolvent at the time. Insolvency means that the total value of the debt exceeds the total assets. This is a tricky proposition, as the amount of insolvency is determined first and if the amount of the debt that is discharged is greater than that amount, there still may be taxes owed. The bottom line is that before a homeowner takes what they think might be the only alternative, that person should check with their tax advisor to determine if there are any tax consequences to the decision.