1099?

Posted by: MikeB1964

1099? - 04/03/14 12:27 AM

Just thinking through the worst case scenario in my custody case. If I end up in bankruptcy court I have a question in regards to this house.

I have a disabled veteran mortgage. I get a good rate and no PMI no VA funding fee. But the VA backs the loan by 20 percent. This is never bankruptable.

I know when homes go to foreclosure, that later on they send you a 1099 for the difference in what it sold for and what you owed. You have to pay taxes on that and the number is often very large.

But is that only for the people that just walked away?
Or if you do a legal bankruptcy is that an out on the 1099 for the loss?

I'm no where near that mind you. I just wanted to figure out where I stand under the worst worst worst case.
Posted by: Gecko

Re: 1099? - 04/03/14 04:00 PM

But is that only for the people that just walked away?

---> No, you could receive a 1099 on a short-sale.

Or if you do a legal bankruptcy is that an out on the 1099 for the loss?

---> A bankruptcy would not vacate the income tax owed on the 1099 for you, because the 'loss' belongs to the lender.
Posted by: MikeB1964

Re: 1099? - 04/03/14 04:53 PM

What do all those people do?

You lose your house, or have a BK, and a year later you
get a bill from the IRS for 20, 30, 40k.....
Posted by: SRS

Re: 1099? - 04/16/14 02:01 PM

You get a second opinion from a divorce attorney. He has you paying money for things you are not court ordered to pay - which from your postings may make you lose your home.
Posted by: Goodmom

Re: 1099? - 05/20/14 10:56 PM

If you declare bankruptcy before the foreclosure you would not pay tax on the discharged debt. If you do get a 1099, there is a form that you would complete (I can't think of the name right now but if you go to a bankruptcy forum they would be able to tell you) and send in with your tax return.
Posted by: Goodmom

Re: 1099? - 05/20/14 11:00 PM

[quote]

Or if you do a legal bankruptcy is that an out on the 1099 for the loss?

---> A bankruptcy would not vacate the income tax owed on the 1099 for you, because the 'loss' belongs to the lender. [/quote

Uh, if he files for a bk BEFORE the foreclosure, he would not owe tax on the discharged debt. If you don't believe me go and ask a CPA
Posted by: MikeB1964

Re: 1099? - 05/21/14 07:28 PM

Thanks!