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hobbes083 · Joined: 11 Nov 2009 Posts: 2 1.44 Dollars($)

I bought a lot in 2006 to build what would had been my primary home. Then the bottom fell out and I was only able to get to the dirt work done before having to go another route and fell behind on my payments. I am on the process of subitting for a DIL. What is going to happen to me? The bank said that I might be hit for the entire amount ($159,000) via 1099. Any advice will be helpful. My credit is already shot, I am needing to minimize the tax hit I will take.

Guest

The answer to your tax liability will come from your CPA. If your lender accepts the deed in lieu instead of foreclosure, he is agreeing to settle the debt.
Sometimes lenders will play the 1099 card to scare you into continuing to make your payments. Whether or not you will have a tax liability will be determined by you and your CPA.
Good Luck!

adonis · Posted: Thu Nov 12, 2009 12:28 am Post subject:

Hi hobbes,

As far as I know, in a deed in lieu of foreclosure, the deficient amount resulting from the sale of the property is forgiven by the lender. The lender cannot sue you for the deficient amount. However, your credit score can get reduced by 250 points.

hobbes083 · Joined: 11 Nov 2009 Posts: 2 1.44 Dollars($)

Thank you, the info is greatly appreciated

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