***PLEASE NOTE THAT THIS SHOULD NOT BE CONSIDERED LEGAL ADVICE OR TAX ADVICE. EVERYONE’S SITUATION IS DIFFERENT AND SHOULD BE REVIEWED BY A PROFESSIONAL IF YOU NEED TO SPEAK TO SOMEONE PLEASE REACH OUT TO US AT 888-934-3444 TO SPEAK TO AN AGENT THAT DIRECTLY OR EMAIL US AT [email protected]***
In a simple answer. Yes. Frequently homeowners find that they file Bankruptcy, mainly with Chapter 7, with the intent to help manage all the debt they have amassed but most importantly in some cases getting rid of it all together because it has become too much to undertake. Many times though, after they have relinquished ownership of the property, the lender proceeds with foreclosure and eventually sells the property at a foreclosure sale at which most times the property sells for less than what is owed and there fore they receive the deficit in the form of a 1099-C. If they receive a 1099-A that generally means that the property was sold at foreclosure for more than what was owed. You should always work with a specialist and when necessary seek legal advice. Also, speaking to your CPA should clear up any additional tax confusions. Many times when the property is your primary residence the difference is still 1099’d but you will be able to discuss with your accountant about filing a Form 982 and wiping away your debt owed to the IRS in taxes.
Two other places to find additional information are (If you need to contact a tax professional call 888-934-3444 and we’ll connect you with our Accounting Division):