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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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I filed chapter 7 last year and was discharged of debt 11/9/2010.

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I filed chapter 7 last year and was discharged of debt 11/9/2010. I own two homes, one of which has sent me a 1099C that cancelled this debt. Can this be possible or is it a mistake? Pls help, I cannot get a straight answer. Sincerely, Charlene

Hi JACustomer,

Was the mortgage for that home included in the Bankruptcy?

If so, was the mortgage re-affirmed?

Customer: replied 6 years ago.
Well all assets were included, the home I live in which is in joint name with my husband, my other home that my 93 year old grandmother and 70 year old mother live in. the house is underwater by about 100,000.00 and was in my name only. The bankruptcy action was my name only, not joint. I never signed a reaffirmed agreement but it does say that i was going to be retaining the house and continuing making my mortgage payments. Then I get this form. I didnt get one for the home I live in. make sense? thank you sooo much, I cannot get an answer. Charlene

Was the mortgage in your husband's name also?

Whose name(s) were on the 1099-C?

Customer: replied 6 years ago.
The mortgage was in my name only. My name only is on 1099-C. The form reads "cancellation of debt" amount of debt cancelled $238,412.83...debt description BNK
was borrower personally responsible for repayment of debt - marked yes, then box 6 is marked bankruptcy date cancelled 11/9/10 which was the day it was ordered on discharge papers. the amount is what i owe on that house.....could I possibly be that lucky and they took pity on me? charlene

Last question: are you still paying the mortgage?

Customer: replied 6 years ago.
well yes. now i am thinking i shouldnt have been for the last two months. what do you think? i am sooo confused.

The lender filed that form so that they could take the tax credit now. They are allowed to file the 1099-C form when a Bankruptcy is filed - they do not have to wait for a mortgage to actually default. This way, they take the tax credit (for the potential loss due to the Bankruptcy), and then going forward they increase their income as you make the payments.

Since the debt reflected on the 1099-C was discharged in your Bankruptcy, the amount is not taxable income for you, but you do have to file form 982 to indicate the debt was discharged in a Bankruptcy.

Customer: replied 6 years ago.
wait though.   do i still owe them????? or has the debt been forgiven?  Are you still there or do I need to hit the green button before this last question answered. pls help. thank you, charlene

You do not still owe the money - in the sense that the mortgage company cannot try to collect it from you if you do not pay. But if you do not pay, the mortgage company can foreclose on the mortgage.

In other words, the debt has not been forgiven in the sense that you can stop paying the mortgage and still keep the home.

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