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Ask Terry L. Your Own Question
Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2884
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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I filed chapter 7 bankruptcy 10/8/2005 my house was included

Customer Question

I filed chapter 7 bankruptcy 10/8/2005 my house was included in the case. I stayed in my house until 6/2009. I sent a letter to chase that I was asking for deed in lew of foreclosure. The house was sold at a sherrif sale August 27, 2010. I have an account at the bank and the account was showing active $104,974.50. I made numoreous calls to different depts and was told the process was not complete. I received a 1099-A tax year 2011 and I was told the house went to an investor and the house wasn't sold until 6/30/11 and that I could still be held responsible for the loan. I was referred to Customer care and their computers are down.
My question is am I still responsible for the loan since it was discharged? and should I be receiving a 1099 A? in reguards to the property?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 5 years ago.

Terry L. :

Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.

Terry L. :

If you did not reaffirm the debt, then the debt is discharged in the bankruptcy case.

Terry L. :

If a loan was written off, it generates a 1099, but since you filed the bankruptcy case, there is no taxable event, since the debt was already discharged in the bankruptcy. If you do get one, provide a copy of the bankruptcy discharge to your tax preparer along with the 1099.

Terry L. :

On top of that, if you were insolvent at the time of the 1099, Obama has a law currently, that would waive any taxable event for you to boot.

Terry L. :

You should be fine, the bk covers you, and the insolvency law is double protection for you.

Terry L. :

Thanks for your questions, good luck. let me know if you have any further questions.

JACUSTOMER-hyprcvj6- :

By continuuing to pay the house payment does that mean you reaffirm? I don't remember signing anything.

Terry L. :

No.

Terry L. :

A reaffirmation is a document you would sign after the filing before discharge which allows the debt to survive bankruptcy and you to stay responsible for payments.

Terry L. :

They are not required, and many lenders let debtors pay the loan, but not reaffirm as long as they stay current on the payments.

Terry L. :

Check with your bankruptcy lawyer, or the bankruptcy court to see if you reaffirmed on the mortgage.

Terry L. :

If you did, you are on the hook, and would get a 1099.

Terry L. :

If so, then you can try to have your tax preparer file insolvency statements if that is the case currently.

Terry L. :

Hope that sheds some light on the matter for you.

Terry L. :

Thanks for your question, good luck.

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