I found some really interesting info that may well apply to some of you here who have gone through foreclosure in 2007, or who are about to have it happen...
HR 3648 Mortgage Forgivness Debt Relief Act--
Again, I'm not an attorney, just giving my opinion on what I believe it means--go read for yourself, cuz it may help you!
I am sure most of you here are all up to date on this, but just in case you're not:
This bill was passed into law, and is retroactive for all of 2007.
If you had to short sale, on your primary residence the amount of debt that was 'forgiven' by your lender, will usually be 1099'ed to you, and you must claim it as income--Well, now you do not have to in certain circumstances.
Also, if your primary residence was foreclosed upon, and the lender 'forgave' your deficiency because it didn't sell for enough $$ to cover the debt--if they 'forgave' the debt, instead of filing a deficiency judgement, instead of you having to pay tax on the 'ghost income'--and getting 1099'ed--this will be forgiven, i.e: you will not have to pay tax on it as income.
This is supposedly retroactive to include the ENTIRETY OF 2007!
Now what I am unclear about is how this applies to BK. It is a new law, and refers to much ch 11 bk code stuff. Most of which bored me cross eyed with the legaleze.
But--lets say you are in, or were in foreclosure--but not BK yet, but your 1099 for the 'forgiven debt' is killing you--well this may well help you.
Certain restrictions do apply of course, and I am sure ammendments will be forthcoming...but as far as I understand:
Home must be primary residence, and ability to receive this tax debt relief is contingent upon which type of mortgage you had on your home--PURCHASE MONEY MORTGAGES ONLY--as far as I can tell. There are some, albeit few exceptions--for instance--if it were a refi, or a cash out refi--AND YOU CAN PROVE THAT $$ WENT DIRECTLY FOR REPAIRS OF THAT PROPERTY--you may be elligible for this relief. No 2nd/3rd/4th mortgages. Again, this is my interperatation of the new bill/law. I'm not an attorney, nor affiliated with any such entity--fact is, I am as broke, or more broke than most of you, I just thought this info may help someone here get a break if they got a 1099 for a mortgage forgiveness--since not all have filed their taxes yet...well--see if/how it may apply to your situation--I hope some of you can truly put this Act to use. And even if you did file your taxes, you can still get this tax break.
Now--**if they could only pass a bill, create a law that would FORCE these lenders to FORGIVE the debt as opposed to suing for deficiency--now that would make some progress**--less people would need to file BK...Or at least I wouldn't be even looking into it!
There is NOTHING in this bill/law/act that states that your lender MUST forgive your debt--nothing--so if they sued you instead of 1099ing you, well, it doesn't help you one bit as far as I can tell.
HR 3648 Mortgage Forgivness Debt Relief Act--
Again, I'm not an attorney, just giving my opinion on what I believe it means--go read for yourself, cuz it may help you!
I am sure most of you here are all up to date on this, but just in case you're not:
This bill was passed into law, and is retroactive for all of 2007.
If you had to short sale, on your primary residence the amount of debt that was 'forgiven' by your lender, will usually be 1099'ed to you, and you must claim it as income--Well, now you do not have to in certain circumstances.
Also, if your primary residence was foreclosed upon, and the lender 'forgave' your deficiency because it didn't sell for enough $$ to cover the debt--if they 'forgave' the debt, instead of filing a deficiency judgement, instead of you having to pay tax on the 'ghost income'--and getting 1099'ed--this will be forgiven, i.e: you will not have to pay tax on it as income.
This is supposedly retroactive to include the ENTIRETY OF 2007!
Now what I am unclear about is how this applies to BK. It is a new law, and refers to much ch 11 bk code stuff. Most of which bored me cross eyed with the legaleze.
But--lets say you are in, or were in foreclosure--but not BK yet, but your 1099 for the 'forgiven debt' is killing you--well this may well help you.
Certain restrictions do apply of course, and I am sure ammendments will be forthcoming...but as far as I understand:
Home must be primary residence, and ability to receive this tax debt relief is contingent upon which type of mortgage you had on your home--PURCHASE MONEY MORTGAGES ONLY--as far as I can tell. There are some, albeit few exceptions--for instance--if it were a refi, or a cash out refi--AND YOU CAN PROVE THAT $$ WENT DIRECTLY FOR REPAIRS OF THAT PROPERTY--you may be elligible for this relief. No 2nd/3rd/4th mortgages. Again, this is my interperatation of the new bill/law. I'm not an attorney, nor affiliated with any such entity--fact is, I am as broke, or more broke than most of you, I just thought this info may help someone here get a break if they got a 1099 for a mortgage forgiveness--since not all have filed their taxes yet...well--see if/how it may apply to your situation--I hope some of you can truly put this Act to use. And even if you did file your taxes, you can still get this tax break.
Now--**if they could only pass a bill, create a law that would FORCE these lenders to FORGIVE the debt as opposed to suing for deficiency--now that would make some progress**--less people would need to file BK...Or at least I wouldn't be even looking into it!
There is NOTHING in this bill/law/act that states that your lender MUST forgive your debt--nothing--so if they sued you instead of 1099ing you, well, it doesn't help you one bit as far as I can tell.
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