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Joseph Scott
Joseph Scott, Attorney
Category: Legal
Satisfied Customers: 171
Experience:  I have practiced law for 10 years. I have handled hundreds of cases if various areas of the law.
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I received an extinguishment agreement on my second. This

Customer Question

I received an extinguishment agreement on my second. This is my personal residence. Will I have to pay taxes on this, and is it legit
Submitted: 2 years ago.
Category: Legal
Expert:  Joseph Scott replied 2 years ago.

Joseph Scott :

Are you there?

Customer:

yes, hello

Joseph Scott :

Have you called your bank that has the second to see if the extinguishing agreement is legit?

Customer:

yes, that would be GMAC.

Joseph Scott :

And GMAC said that the notice is correct?

Customer:

yes

Joseph Scott :

How much was the second for?

Customer:

80,000.00

Customer:

I'm concerned about the tax situation

Joseph Scott :

Okay, if GMAC is saying that it is extinguishing the note, and if you have written proof, then I would write them a letter explaining that: According to the extinguishing agreement dated June ??, 2012, I am no longer obligated to pay any money for loan # XXXXX (whatever the loan number is) for the second mortgage on my house located (input your address). If I am wrong in this assumption, or if this letter was sent to me by error, please contact me within 30 days of this letter via certified mail. If I do not receive any notice, then I will discontinue any further payments.

Joseph Scott :

However, you are correct, you can have a tax implication for the $80,000 forgiven by GMAC.

Joseph Scott :

Are you current on the note?

Customer:

even if it is where I live? That would then be considered income?

Customer:

not current

Joseph Scott :

Yes sir. It might not be consider actual income, but it will be considered revenue of one type or another.

Joseph Scott :

Can you make any payments whatsoever?

Customer:

thank you for your time.

Joseph Scott :

If you can, I would start making payments to a savings account just in case. However, financial institutions do not always send out the 1099s for the loss income, it's kind of crap shoot.

Joseph Scott :

I know of several people who did not receive a 1099 for the income, but some people have. It just depends on the bank.

Joseph Scott :

Do you have any further questions? I would be more than happy to continue to answer if you do?

Customer:

no thank you.

Joseph Scott, Attorney
Category: Legal
Satisfied Customers: 171
Experience: I have practiced law for 10 years. I have handled hundreds of cases if various areas of the law.
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