Real Estate Law
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I do not know how.
They really cannot do this after issuing the 1099-C, which is a cancellation of debt. Also, this cancelled debt was reported to IRS as income to you. The lender has already taken a loss for the loan. So, going back now to try recoup the loss after it has not been reported to IRS is quite illegal, an unfair and deceptive act and practice.
You should report the lender to your Attorney General's office and Consumer Financial Protection Bureau.
Goodluck with your case,
Correction for my typos:
The lender has already taken a loss for the loan. So, going back now to try to recoup the loss after it has been reported to IRS is quite illegal, an unfair and deceptive act and practice.
What type of an attorney would I hire to handle this?
Response: You would need the assistance of a consumer Attorney. Most consumer Attorneys would take a case on contingent fee basis. This means that the Attorneys may not charge upfront for their fees and would only get paid if they win the cases for the consumers. Even then most Courts award Attorney fees to prevailing consumers. So, you may not have to pay out of pocket to obtain a consumer Attorney to assist you with the case.
You can use the following sites to find local consumer Attorneys: