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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28082
Experience:  Taxes, Immigration, Labor Relations
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We filed chapter 7 bankruptcy but entered into a loan

Customer Question

We filed chapter 7 bankruptcy but entered into a loan modification after the discharge was final. The mortgage company filed a 1099C and in box 6 they marked code F as the identifiable event code. Shouldn't they have used bankruptcy as the code? And is there an alternative that could be used for insolvency?
Submitted: 9 months ago.
Category: Tax
Expert:  Lev replied 9 months ago.

If that loan modification was NOT a part of your chapter 7 bankruptcy procedure - the creditor may not use "A—Bankruptcy" as the reason on form 1099C...

Expert:  Lev replied 9 months ago.

Based on your information - you entered into a loan modification AFTER the bankruptcy was finalized.

So that reporting is correct and you may not use the bankruptcy as the exclusion reason.
If that discharge was related to your primary residence - you may use "Discharge of qualified principal residence indebtedness" as the exclusion reason.

But if that is not your primary residence - you may verify if you qualify for the insolvency exemption.

Let me know if you need any help with reporting.

Otherwise,

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