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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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If I file bankruptcy, can you tell me. If I own a property,

Customer Question

If I file bankruptcy, can you tell me. If I own a property, my home, and if my debts, which will include mostly non-dischargeable debts, are less than the assets on my home, can they order the sell of my home to pay these debts? My non dischargeable are mostly the tax I am going to have to pay for money forgiven on a short sale of my other home.

Or would issues such as capital gains/losses play a part in the amount of tax I would have to pay? And if so, how do I determine if I would have enough capital gains/losses that would off set the tax I would have to pay. Or can I even file bankruptcy until I was able to determine through filing taxes how much tax I am going to be responsible for, or would that be part of determining bankruptcy, what my finial tax responsiblitity would be after capital gains/losses
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 1 year ago.

cfortunato :

Hi - my name is XXXXX XXXXX X'X a Bankruptcy and Consumer Protection attorney here to assist you.

cfortunato :

If you file a Bankruptcy, you will not have to include as income the 1099-C amount that was forgiven because of the short sale.

cfortunato :

The liability for that tax will not be discharged - it will be deemed to not exist at all.

cfortunato :

Whether or not you would have to give up your home if you file a Bankruptcy will depend on whether you have lived in Ohio continuously for the past 2 years, and the home's equity. (Equity = current market value minus the balance of any mortgage(s).)

cfortunato :

Whether or not you will have to give up your home would not depend on how much debt you have.

cfortunato :

Is this what you wanted to know?

Customer:

I have lived in Ohio my whole life, and the issue with the home is that the assets I have in my home is more than the debt I owe, or would owe if i have to include to 1099C, or close to it. I was told since there is that amount in the home they woiuld order the home sold to pay the debts, or make me file the bankruptcy that had me repaying the debts over 5 years. It is the debt that would be on the home that is going for short sale that is going to cause me the greatest deal of debt. If I understand you correctly, if I file bankruptcy, then basicly I would not get a 1099C on the house. So basicly, no tax existed. Is this true of all the bankruptcy options, or only total?

cfortunato :

Thank you for your response.

cfortunato :

In your last sentence, what did you mean by, "...or only the total''?

Expert:  cfortunato replied 1 year ago.
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Expert:  cfortunato replied 1 year ago.
If you file any Bankruptcy, you do not have to include the 1099-C mortgage forgiveness amount as income, and you would therefore not have to pay income tax on that amount.
It does not matter which Bankruptcy you file, but there is a requirement that the Bankruptcy be filed before you file your income tax return for the year in which you receive the 1099-C form. (If necessary, you can file for a 6-month extension to file your income tax return.)
Customer: replied 1 year ago.

If I understand you correctly, if I file bankruptcy, I dont include the 1099-C in the equation? If that is correct then my debts owed are about $40,000, my assets in the home, is about $50,000. I am on disability income. I was told I can not file total bankruptcy, chapter 7, but would have to file chapter 13 and repay the debts over time, or sale the house to pay the debts.


My understanding of my situation is this then,


I can sale my home as a short sale, but NOT if I file bankruptcy. So would have to sale first then file. I dont have to claim the 1099-C on taxes as long as I file for bankruptcy THIS YEAR, before I file my income taxes, if I file my taxes for this year, then file bankruptcy the 1099-C will be applied to my taxes for NEXT year.

Expert:  cfortunato replied 1 year ago.
A short sale means the house is being sold for less than the balance of the mortgage. This means the house has negative equity (aka being underwater). If your house has $50,000 equity, it cannot be sold in a short sale (but it can be sold in a regular sale).
The rest of your understanding is correct.
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience: Bankruptcy professor.
cfortunato and other Bankruptcy Law Specialists are ready to help you

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