Should I file BK after Foreclosure>>>

[ifly2007]

Our home was sold in foreclosure auction, I'm thinking If I should fiel BK as well. I know that I will be receiveing 1099 at the end of the year for the difference of the amount it was sold for. ANy advise is greatly appreciated.

[emoney]

Unless you have other debts and their is a big shortage that the lender is requiring you to pay from their sale of you home, I do see the reason for BK. It would not elimate the taxes due on the 1099.
regards,
emoney

[coma]

Unless you have other debts and their is a big shortage that the lender is requiring you to pay from their sale of you home, I do see the reason for BK. It would not elimate the taxes due on the 1099.
regards,
emoney

I'n not sure you're correct in reference to the 1099. If the OP files, the deficiency balance is included and discharged as unsecured debt, so there is no 1099 and no taxes.

Experts, correct me if I'm wrong.

[kiddles]

You are correct - right now, the OP owes the difference between what he owed the ank and what the house sold for. that debt has not been forgiven, so there's no tax due on it. Right now.

HOWEVER - if the bank does forgive the debt and issue at 1099, then there is tax due (but the bank can't then come after you for the money) and the tax won't be erased in the BK.

[HHM]

The discharge of the deficiency balance in BK does not effect the tax liability for forgiven debt.

Granted, if you qualify for a chapter 7, then you would qualify for IRS insolvency and thus would not have to pay income tax on the deficiency balance, but you would still need to complete Form 982 when you file your taxes.

[coma]

Thanks for the clarification...my parents are in the same situation...

[ifly2007]

Thanks for the clarification...my parents are in the same situation...

Thanks for all the response. COMA i see that you convert from 7 to 13, i just wanted to ask why it was converted to ch13 if oyou're already on ch7. Do you know how soon can you purchse a home if you filed ch13?

[coma]

We filed a 7, and we converted because the trustee didn't like our vehicle payment. To keep it, we had to convert...stupid move, though! We learned our lesson the hard way. We gave up the vehicle after almost a year in the 13, and converted back to a 7, since we moved and have half as much income. I'm not so much interested in buying a house. I know I can't afford it and don't have any money saved towards it, so I can't answer that question.

[chpxiii]

Do you know how soon can you purchse a home if you filed ch13?

Usually one year after you filed chpt. 13 and have made 12 months of ontime payments.

You need court approval for the loan, and a mortgage lender that's willing to work with you while in chpt. 13.