After a discharge

[denisejohn65]

If you get your discharge and you gave up your house or condo...what are some things you have to worry about on your taxes?I hear all this stuff about 1099 c and it scares me.I have nothing. My 341 is July 20th Please answer!

[denisejohn65]

What I mean is....is there other things you have to do when you file you taxes????? Please help me.

[whipster1]

You may get a 1099 but clearly you were insolvent, so the tax liability goes *poof*

[denisejohn65]

I don't understand....sorry can you explain

[OregonMom]

I believe they mean you have no more liabiltiy once it is discharged. Not responsible for any taxes.

[denisejohn65]

what does insolvent mean????

[overthedebt]

what does insolvent mean????

basically, bankrupt.

ADJECTIVE:
Unable to meet debts or discharge liabilities; bankrupt.
Insufficient to meet all debts, as an estate or fund.
Of or relating to bankrupt persons or entities.

NOUN:
A bankrupt.

[denisejohn65]

I have one condo with no seconds on it. I'm letting it go.I'm praying I will get a discharge and not have to worry about it....right...if you get a discharge then there is no need to worry right??I'm concerned that do you think I could get a 1099c sent to me. I already filed bk.I'm just scared and afraid of a lot of the things I read on here. I hardly understand any of these things about forclosoure and how it all works.I'm really scared!!!! I have my 341 next week and I'm soooooo nervous!!!!!

[PdxDavid]

I believe you would only get a 1099c if you did a short sale or possibly a deed in lieu of foreclosure. The reason is... they consider the difference between what you owe and what they sell the place for your income.

For example.
You owe 200,000 and the bank agrees to a short sale at 150,000. The 50,000 difference is considered income or gift or something like that. You then get a 1099 and are taxed on the 50k.

As long as you have included the house/condo in your BK and have not signed a reaffirmation you are bankrupting on the entire 200k. That means they are not giving you a break on any of it. It all is included in the BK.

[keepmine]

You have no tax liability for debts discharged in bk.
Go to the IRS site and enter form 982 in the search function. That will give you a long discussion about taxes and bk.

[denisejohn65]

So, when people just let their place foreclose with out a bk.....how do they end up with the 1099???

[PdxDavid]

It would make sense for them to get the 1099 after foreclosure if the mortgage company did not sue them for the difference. Seems that some states do not allow for them to get a judgment (double check this) for the difference. In that case the difference would become income and would be taxable. Hence the 1099.

[aces67]

So, when people just let their place foreclose with out a bk.....how do they end up with the 1099???

Because they didn't file BK. Filing BK wipes it all clean. Foreclosure with no BK leaves you liable for the debt.

[denisejohn65]

I'm so scared of these 1099 things and I have not even had my 341 yet.....people have said credit card companies have sent these.......I don't get it. So taxes are hard for a person after a discharge????

[PdxDavid]

If you are filing BK and include the house/condo and all debts there is no tax liability. Tax liability comes when the debt is forgiven by the lender.