1099-c and bankruptcy

[nc73]

What happens if I get a 1099c while in the process of filing bankruptcy or after filing? I have a 1099-a currently (foreclosure was last year) and waiting to get a 1099-c (if it's forgiven that is). I know if the home was included in bankruptcy I'm ok, but I haven't filed still!

[HHM]

You will still need to use IRS Form 982, but you would simply indicate that the debt was included in bankruptcy, and you wouldn't include the forgiven debt as income.

[nc73]

You will still need to use IRS Form 982, but you would simply indicate that the debt was included in bankruptcy, and you wouldn't include the forgiven debt as income.

But if the debt isn't forgiven yet how would I include that in bankrutpcy?

[HHM]

You list the mortgage lender as a creditor just like you normally would. That covers any potential deficiency, the deficiency gets discharged in your BK. (I think you are over thinking this )

[nc73]

You list the mortgage lender as a creditor just like you normally would. That covers any potential deficiency, the deficiency gets discharged in your BK. (I think you are over thinking this )

I didn't think I could list it since it was already foreclosed...I'm probably am over thinking it.

[HHM]

The deficiency is still a potential claim against, it is a live debt (even if it is forgiven); thus, you should (must) list it in your BK.

[HHM]

It doesn't matter for 2 reasons;

1. As you stated, your broke, and
2. (and this takes many people by surprise), there is a loophole that allows a lender to issue a 1099-C yet keep the debt as collectible.

[MSbklawyer]

I concur with HHM. Conceivably this could come back to bite you if you don't list it.

If there's ever a question of whether to list someone in your bk, then err on the side of listing it.

[HHM]

So you can't wave a (send them a copy) 1099-C at a CA and make them go away? Gee, where do I find this loophole, because as you know everyone thinks the debt is forgiven when a 1099 is issued.

See the case of Debt Buyers Association v. Snow

It's actually a very narrow exception, but there is a difference between being required to issue the 1099-C (triggering event) and the discharge (actual forgiveness) of the debt.

If only a triggering event has occurred (requiring issuance of a 1099-C), the bank can still collect the debt despite the issuance of a 1099-C.

[HHM]

So, can I put the brakes on the CA by sending the 1099-C copy? I am just trying to avoid being sued, but if it happens I vacate it later.

Yes, still send it and see what happens.

But, the letter makes a little sense; cancelling of a debt and forgiveness of debt are different things.

[Catia]

due to my personal experience, I'd say-please-just for the heck of it--
check your county recorders office-go in person-see if a satisfaction piece was filed on the mortgaged property...

I'm not saying this is the case--but it is what happened to me-and it has happened to others-I got goofy letters from the loan servicer about my mortgage balance being 0...
They kept saying "it is either paid in full or cancelled" on the phone--made no sense--no one there could/would tell me.

I asked the lender/servicer if I would receive a 1099-c for the cancelled debt--they said no...
But I DID receive one 8 mos later.

So I went digging at the county office. I found lots of stuff I did not know I could--like all kinds of names and skribbling on docs--and dates that did not add up...


Also check to see who the registered mortgage or who the assignment is with...if it is not showing as paid off--or even if it is--you can get copies of everything--certified right there on the spot.

Fact is, this is HOW I found out my mortgage was satisfied-not just cancelled.

I'd file that 1099-c with the amended 2008 tax return, on a 982--even if you're not discharged yet--cover your but...if the govt says the debt is discharged--I'd figure it is. You'd then have solid proof of the cancelled debt.