2nd mortgage chargeoff

Guest 0.10 Dollars($)

I have a 2nd mortgage that is a possible chargeoff. We are getting ready to file chapter 13 bankruptcy, but have not done it yet, and cannot do it before they may charge off the mortgage. What happens as far as the IRS- I was told it could be reported to the IRS as income when they charge it off. How does that work?

cliff · Posted: Thu Aug 21, 2008 8:02 am Post subject:

Hello sherrill423,

A charge off is not a forgiven debt. Usually you will be provided with a 1099 showing the amount of the debt as ordinary income that was earned by you, caused by the extinguishment of your debt. So yes, it can be reported to the IRS as income.

Let us know if you still have questions.

Good luck.

Guest 0.10 Dollars($)

If we are making payments to the recovery company--how does that affect the income reported? We should still have to make payments through the court, I'm sure. Does the entire mortgage count as income--the last time I talked to them, they said they have a negative value on the house. We owe more than its worth--How does that affect the income reporting? Or does it?

larry · Joined: 27 Jun 2007 Posts: 3328 473.51 Dollars($)

Hi sherril.

You question has been answered at http://www.mortgagefit.com/second/chargeoff-chapter13.html

Please take a look at it. Feel free to ask if you have any further questions.

Best of luck,
Larry

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