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Question (1) Was this discharge a result of a sale of foreclosure? Yes or No. We dont know why it was discharged as it's been 7 years since it was sold at an auction.
If the property was sold or otherwise disposed - there is NO collateral for the debt - and debt becomes unsecured - as for instance a credit card debt. So your answer is NO.Question (2) If her total mortgage debt was 240k, what is her total acquisition debt?
That is not related to your situation as there is no collateral.
That is not a home acquisition debt anymore after the property was foreclosed.
If you are looking for options to exclude the forgiven debt - you would need to try insolvency exemption.
That is correct. It WAS secured BEFORE the property was foreclosed 7 years ago...
But after that - it was not secured.
If the debt was not cancelled at the time of foreclosure - it became unsecured.
That is something your wife should know...
The date the debt was forgiven - is that date stated on form 1099C.
As you are in California which is a the community property state - all jointly owned assets are divided equally.
That is how it was originated in the first place.over the second
As a second mortgage - it had a home as a collateral, however - the first mortgage takes priority over the second mortgage - so - if the first mortgage is paid in full - whatever left is used to pay the second mortgage - and if not paid in full - the rest becomes unsecured loan.
You may want to look over the following article about relation between these two types of mortgages.