1099A vs. 1099C

[caligirl]

I am sure this question has been asked before, sorry for the repeat.

Our home foreclosed on 12/26/07. We received a 1099A and just found out yesterday from our tax guy that this is an "information only" form. My question is... does this mean that we will for sure received a 1099C at the end of this year? Our tax guy said that they have to do a 1099 (A or C or both) one way or the other, but they don't have to send both.

Thanks!

[HHM]

Strictly speaking ALL 1099's are informational.

1099(a) is simply a record of the foreclosure and memorializes that the lender has taken legal possession of the property away from the debtor.

1099(c) is the record of any cancelled debt.

You may or may not get a 1099(c). If the bank wants to keep the deficiency balance as a collectible debt, then you will NOT get a 1099(c). If you are in a state that does not allow deficiency balances, or if the bank simply decides to cancel the deficiency, then you will likely get a 1099(c).

If you get a 1099(c), then you need to file IRS Form 982.

[caligirl]

Thanks for the reply!

I am in California.

If they do not send a 1099c and keep the deficiency balance as a collectible debt...what happens then? I am sorry...this is all so confusing to me.

We also had a 2nd. mortgage on the house through the same company. We haven't heard a thing from them on the 2nd... We feel like this is never going to end and be able to "live" our lives again.

[HHM]

If there is a deficiency balance, it simply becomes an unsecured debt.

[caligirl]

So it becomes an unsecured debt...that they try to collect on?...at which point then I basically have to claim bankruptcy...cuz there is no way to pay the chunk of change and then the 2nd. mortgage chunk of change too. I just don't understand all of this stuff...whick explains why I am in this situation to begin with I guess....

[dumbdumb]

hi .. so what happens in after a chapter 7? i have been discharged the end of 07 surrendered both homes but my homes have not foreclosed yet? will i recieve a 1099a or c for 08? or do i need them for 07 taxes?

[HHM]

hi .. so what happens in after a chapter 7? i have been discharged the end of 07 surrendered both homes but my homes have not foreclosed yet? will i recieve a 1099a or c for 08? or do i need them for 07 taxes?

As a matter of record keeping, you will probablyget a 1099a, but you probably won't get a 1099c. What is supposed to happen when you surrender your home IN BK, the BK estate actually gets the 1099c and the trustee includes that loss in the tax return that is filed for the BK estate.

[HHM]

So it becomes an unsecured debt...that they try to collect on?...at which point then I basically have to claim bankruptcy...cuz there is no way to pay the chunk of change and then the 2nd. mortgage chunk of change too. I just don't understand all of this stuff...whick explains why I am in this situation to begin with I guess....

It is actually quite rare for mainline mortgage lenders to pursue deficiencies. Doing so is some what of a PIA for them, because they have to go back into court to get the judgement. It is generally easier for them to simply right off the deficiency as a loss and issue you a 1099c. So, although it is possible that a deficiency could be collected, it is not happening as much as people assume. All you can do is play it by ear, hope for the best, but plan for the worse.

[Catia]

HHM,
This topic raises some question I have, in sort of similar situation...
I expect a 1099 a or C, but lender won't tell me anything.

I spoke with executive services, and they state there is no "HUMAN BEING" (their words verbatim) in their "Support Department", so I must fax or write any questions I have to them, and wait 60 days...
Here is what happened:
While I was saving for the atty fees to file BK, and while I was in FC, but property had not sheriff sales yet, the lender FORGAVE my mortgage, and files a Mortgage satusfaction piece with my county, of which I have a certified legal copy.
The Lender/servicer did not inform me of this before they did so. They refused to work ANY agreements with me, refused any shortsale ideas, refused to do anything except foreclose...Now this??? I am baffled.

My question is this--Since I have a legal and binding properly registered Satisfaction Piece (as is required in PA)--The lender cannot hold the account for further collection by law can they??
They must 1099-c me right?

Lender/Servicer refuses to answer ant questions via phone except that I am "paid in full" on my loan as far as they are concerned--I do not know where to ask questions--and I need to prepare, as this has throw the biggest monkey wrench into my plans for BK--Now I fall into w weird grey area, and BK doesn't seem the right choice now. Suggestions? Info? Thoughts?