HELP

Guest

My court date for my bankruptcy case is in March. My house was foreclosed on in 2008 in GA. I got a 1099-A with the principal being more than the FMV. My attorney put the mortgage company on the petition for the bankruptcy with no balance listed. He told me that I would have only had to pay the tax on this if I hadn't filed bankruptcy. Will I have to pay tax and pay back the over $40,000? I feel sick.

Posted: Fri Feb 27, 2009 4:17 am Post subject:

Hi KRI,

I guess your attorney wanted to say that if you haven't included the mortgage in your bankruptcy, you could have applied for a deed in lieu. In the process of deed in lieu, the deficient amount resulting from the sale of the property is forgiven by the lender and you are required to pay the taxes on that forgiven amount. Depending upon the state where you live in, taxes on the deficient amount could also have been forgiven.

But as you've already filed bankruptcy, you will have to wait till you get the discharge. If you have filed Chapter 13 bankruptcy, then you will have to pay the debts according to new plan that will be given to you by the lender. If you have filed chapter 7 bankruptcy, then you will not be personally liable for paying the dues. However, if you reaffirm the debts, then, you will be liable for the payments.

Thanks.

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