Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

M.: I received a Notification of Lien Release on my 2nd mtg…

Customer Question
M. Baker: Hello. I...

M. Baker: Hello. I received a Notification of Lien Release on my 2nd mtg which states:" This letter is to inform you that XXX lendedr has decided to cease collection efforts on the loan associated with the above referenced account number, and will release it lien on your property. After the lien release is issued, your ownership interest in the property and your right to occupy the property will no longer be subject to our lien.

Accountant's Assistant: Thanks. Can you give me any more details about your issue?

It goes on to say "if required by law, XXX lender will report this debt forgiveness to the IRS on for 1099 C. Currently I am chapt 13 with another two yrs. My 1st mortgage is current. My second was part of the Chapt 13 but only for what they notified the court of (which was hundreds of dollars). To my knowledge my payments to the BK trustee do not include any amounts beyond what the court received as a claim.

Submitted: 2 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 8 minutes by:
1/24/2016
Tax Professional: Jax Tax, Tax Attorney replied 2 years ago
Jax Tax
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1,408
Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
Verified

Hello. I have reviewed your account. It is common place for a mortgage company that is in 2nd or 3rd place to release their lein during bankruptcy if the value of the home is less than any mortgages with priority leins.

Ask Your Own Tax Question
Tax Professional: Jax Tax, Tax Attorney replied 2 years ago

This does a few things. One it helps their balance sheet.. Also, it means they no longer can collect the debt by way of foreclosure. Since you are in bankruptcy, they will lose all ability to then collect the unsecured debt. They may issue a 1099c to you but since it is part of bankruptcy, it is not taxable. Form 982 would be included with your tax return to state such.

Ask Your Own Tax Question
Customer reply replied 2 years ago
I need you to refine/clarify your answer. In my original question I mentioned that they claimed only hundreds not the balance. I currently have 2 more years left to the Chapt 13. Will I have to pays taxes on the amount listed on the 1099-c (I am assuming it will be the mortgage balance).
Tax Professional: Jax Tax, Tax Attorney replied 2 years ago

They only include or as you put it "claim" up to the FMV of the home. Seeing as there are mortgages with priority, it would make sense that on a small amount of the FMV of the home secured that particular mortgage which is why only a couple hundred was "claimed.

Ask Your Own Tax Question
Tax Professional: Jax Tax, Tax Attorney replied 2 years ago

Or it is likely, the mortgage company figured they had no chance ever to collect and simply wrote off the debt for business purposes. More likely that it is tied to bankruptcy.

Ask Your Own Tax Question
Tax Professional: Jax Tax, Tax Attorney replied 2 years ago

The couple hundred that was in the bankruptcy has likely been paid in full by the trustee with previous BK payments which is why you are now getting the release of lein.

Ask Your Own Tax Question
Tax Professional: Jax Tax, Tax Attorney replied 2 years ago

Example. Fmv of home is $100 at time of filing BK. 1st mortgage is $80k, 2nd is $19,500, 3rd is $10k. Only $500 of 3rd mortgage is included in repayment schedule of chapter 13 because the FMV limits it. Once the $500 is paid, the 3rd goes away as does the lein.

Ask Your Own Tax Question
Customer reply replied 2 years ago
The only amount claimed was the few hundred. No previous bk payments were made .Since I am currently in bk - chapter 13 and to your point the trustee did pay the few hundred in full, I am wonderingi f I am on the tax hook for the balance - in excess of $100k
Tax Professional: Jax Tax, Tax Attorney replied 2 years ago

You are not on the hook so long as you make it through the BK to the last payment. If the BK defaults, the amount owed will come back.

Ask Your Own Tax Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Wallstreet Esq. Your Own Question
Wallstreet Esq.
Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 586
586 Satisfied Customers
Experience: 10 years experience

Wallstreet Esq. is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,512 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
I have a question regarding a lien with my house, the detail
Hi, Good morning, my name is***** have a question regarding a lien with my house, the detail is: … read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,512 satisfied customers
I went through a short sale on my home in 2016. Needless to
I went through a short sale on my home in 2016. Needless to say, tough, but over. I am now preparing to get my taxes done. I have not received a 1099-C from either my first nor second mortgage company… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Will our 2013 Discharged C7 bankruptcy exempt us from a 2014
Will our 2013 Discharged C7 bankruptcy exempt us from a 2014 1099 which would result from a $50K write-off by the owner of the 2nd? We just received an offer from an investor/realtor to buy our underw… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Hello, since federal mortgage forgiveness act has not been
Hello, since federal mortgage forgiveness act has not been extended The situation in Portland, Oregon. Husband and wife purchase their primary residence in 2005, with 1st mortgage, after purchase took… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I live in WA state. Mortgage was discharged in Chapter 7 BK
I live in WA state. Mortgage was discharged in Chapter 7 BK in 2011. Prior to BK house had been in foreclosure process. Process stopped when filed. Have not lived in house since May 2010. Thought bank… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
A second is owed on a house, and there is little or no equity
A second is owed on a house, and there is little or no equity to pay it. The second is a line of credit that was taken out against the house for purposes other than remodeling (money used on other thi… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I am closing my business the end of March due to economic reasons.
I am closing my business the end of March due to economic reasons. I own the property as well and need to sell or auction it. I have federal tax liens on the property for approximately $78,000 and my … read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,512 satisfied customers
I am currently in a chapter 13 bk and have made 31 of 60 payments
I am currently in a chapter 13 bk and have made 31 of 60 payments to the court. We are paying our 1st mortgage but the second is in the bk so they get money each month, our pmt is 1275 and they get 52… read more
fastfile
fastfile
Tax Advisor
Master's Degree
550 satisfied customers
We have a pending issue associated with trying to do a “short
We have a pending issue associated with trying to do a “short sale” and selling our home in San Mateo, California. I need sound California law and tax advice About Us My wife and daughter are Canadian… read more
Megan C
Megan C
Certified Public Accountant (CPA)
Master's Degree
8,655 satisfied customers
I purchased my residence in 2005. I had a 1st and 2nd loan
I purchased my residence in 2005. I had a 1st and 2nd loan for my primary residence. The 2nd loan was in the form of a heloc. I foreclosed in November 2010 and I received a 1099-c for the outstanding … read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,512 satisfied customers
My husband and I took out a 1st and 2nd mortgage for an investment
My husband and I took out a 1st and 2nd mortgage for an investment home. The home went into foreclosure. The bank divided the loan into 2 loans 1st and 2nd mortgage so we would have the down payment f… read more
FiveStarLaw
FiveStarLaw
Attorney
Doctoral Degree
477 satisfied customers
I filed for chapt 7 BK on 9-4-08. It is not yet discharged.
I filed for chapt 7 BK on 9-4-08. It is not yet discharged. I have 3 rental properties that I am including in the BK, all with mortgages. The mortgages have not been foreclosed upon. My question is ho… read more
Anne
Anne
Master Tax Preparer
1,328 satisfied customers
Deed In Lieu Do I need lenders approval first Can I
Deed In Lieu : Do I need lender's approval first ? Can I volunteer to surrender by giving the deed ? without first obtaining the lender's approval ? What specifically is my consideration for them to r… read more
Ed Johnson
Ed Johnson
Senior HR Consultant and Business Devlpm
Bachelor's Degree
6,994 satisfied customers
what detail is needed I said it all in original question.
In 1995 some company w/o my knowledge put a $485 tax lien on my property due to Mortgage Company not paying our taxes on time. They, whoever they are, no longer exist and everytime I have bought and s… read more
Ed Johnson
Ed Johnson
Senior HR Consultant and Business Devlpm
Bachelor's Degree
6,994 satisfied customers
my brother bought a 2nd house 6 months ago for his ...
This depends on what kind of forclosure you are talking about. You asked if there was any way, and I provided you a back door way. California allows both judicial and non-judicial forclosures. Most le… read more
Ed Johnson
Ed Johnson
Senior HR Consultant and Business Devlpm
Bachelor's Degree
6,994 satisfied customers
I lost my home to foreclosure last year. I had a first and ...
Dear redd, So since this was not a judicial forclosure, the second can follow the procedures involving deficiency. Under Nevada law, where forclosures are concerned, that the lenders including the sec… read more
Ed Johnson
Ed Johnson
Senior HR Consultant and Business Devlpm
Bachelor's Degree
6,994 satisfied customers
My second lien has been written off, according to all 3
My second lien has been written off, according to all 3 credit bureau reports. What does this mean? Are they foreclosing? We are 4 months behind with 2nd mortgage. My first and second mortgages are wi… read more
Ed Johnson
Ed Johnson
Senior HR Consultant and Business Devlpm
Bachelor's Degree
6,994 satisfied customers
Is there a statute of limitation for a lien on ...
Is there a statute of limitation for a lien on state tax. (I have a lien from 1992, for $432, on my credit report). Can I get it removed from my credit report? Optional Information: denver, Colorado… read more
Mr Tax Tips
Mr Tax Tips
Graduate Student
2 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x