Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
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The mortgage was listed in the bankruptcy discharge?
Yes, we included the 1st TD (Chase) ~$700 and 2nd TD (B of A) ~$100K in the BK and did not re-affirm either debt.
then after the foreclosure you are not liable for any cancellation of income as the bankruptcy filing vacated your obligation
Meaning no deficiency judgement or tax liability?
The most common situations when cancellation of debt income is not taxable involve:
Both, since the debts were discharged, they cannot come after you for any balance
and the IRS cannor make you declare the cancellation as income as IRS rules specifically allow bankruptcy filers to not have to declare it as income.
the bank that gave you the modification was the same bank that was listed on your petition?
Are we relieved from tax liability because of the Mortgage Debt Relief Act, or because of the BK? What happens whent he Mortgage Debt Relief Act expires (presuming it isn't extended)
Are we forever exempt from the tax liability because of the BK, or because of the Mortgage Debt Relief Act?
Because of the Bankruptcy filing first, the MDRA also applies
If the MDRA does not get renewed, the fact youfiled a bankruptcy resolves the issue
Sec. 108(a)(1)(A) that provides that cancellation of indebetness income is not includable in taxable income if the COD income is from discharge during a bankruptcy.
Sorry for the duplicate question. What a relief! No one has been able to answer that question for me. My BK lawyer told me I was exempt from a deficiency judgment and state/federal taxes, but I didn't know if it was because of the BK or the MDRA. I even called the IRS, but didn't trust their answer. I am soooo glad that my exclusion has nothing to do with the MDRA. With our nation's debt problem mounting as it has been, I fully expect for the MDRA both at the federal and state levels to be repealed (or terminated, as it were). Thank you for your help, you really took a load off my mind!
Bankruptcy law would not help any debtor if they had to pay taxes on their canceled debt, so as long as the mortgage was listed and discharged, they cannot come after you,
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I just realized that I failed to answer one of your questions, yes I got the modification with the same mortgage company. Though that probably doesn't change your answer, I just wanted to acknowledge your question. If you have any additional questions, please ask, otherwise I will wait a few minutes to accept.
I just wanted to make sure, also remember the bankruptcy law states "Loan modifications after a chapter 7 bankruptcy can only be binding as to the debtor on the note if the debtor reaffirmed the mortgage with court approval during the pendency of the bankruptcy case. 11 USC 524 prevents the debtor and creditors from entering into an agreement after bankruptcy for a debt that was discharged in bankruptcy. Therefore, unless the mortgage was reaffirmed in bankruptcy, any post discharge home modification is only binding as to the creditor’s lien rights."
So you have no issues
Bless you. Have a lovely evening.
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