Anyone with an experience with 1099 after a deficiency from a foreclosure. Is the 1099 an automatic thing that lenders or bank will give for a forgiven deficiency? Is the BK the only way to prevent this?
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I had a foreclosure last year, but I did not have a deficiency (according to them). I received a 1099-A which listed the fair market value greater than the mortgage balance. If they do actually forgive debt after determining that you have a deficiency, then you should get a 1099-A or 1099-C. It is an automatic thing.
I would not consider filing BK if this is your only reason, because you can often avoid paying any taxes on the debt cancellation if you show the IRS that you were insolvent at the time of the cancellation. To them, insolvent means having more debt than assets, which is probably the case if you are upside down on your house. -
But isn't it harder to prove insolvency and more work needed? Is it easier to BK than go through proving insolvency? We are also scared of wage garnishment which could be avoided in BK.Comment
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