We filed Chapter 7 in 2001. We were behind on house payments and the creditor was filing foreclosure. We decided to file Chapter 7 and we gave back the house to the creditor. Everything we included was discharged. Now we have received a notice from IRS that we didn't include the loss of our home on our income taxes and we owe them $3,417.75. How can this be? We thought the house was discharged?
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Sounds to me like you didn't pro-rate your tax savings the year you foreclosed on your house. The bad news is, this debt is going to have to be paid.
Good Luck!The information provided is not, and should not be considered legal advice. All information provided is only informational and should be verified by a law practioner whenever possible. When confronted with legal issues contact an experienced attorney in your state who specializes in the area of law most directly called into question by your particular situation. -
Chapter 7
Todd, Would you please explain what you mean that we didn't pro-rate our tax savings the year we forclosed on our house? The creditor filed foreclosure, but that's when we went to an attorney and she filed bankruptcy. A motion was ordered for a relief from stay and abandonment. We then left the house and it was turned back to the creditor. Our lawyer said it was discharged and we had nothing to worry about. You have confused me. The reason most people file bankruptcy is because they are in debt and can't pay the debt. Doesn't bankruptcy "free" you of your financial obligations? We had no assets to distribute among our creditors. If I'm sounding mad, I'm not. I just want you to explain things too me. Hopefully if I still don't understand( which could be very possible) I can ask more questions. Thanks a bunch!!!Comment
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Catsue,
It appears to me that you used your home as a tax shelter for the entire calender year, which it was foreclosed in. The IRS found out, and now they want thier money back. You should've only used your house as tax saving for the months in which you were paying your mortgage.
If my speculation is correct, you're going to have to reimburse the IRS. Call them immediately and making payment arragements. If you don't they'll simply withhold your tax refund.
Good Luck!The information provided is not, and should not be considered legal advice. All information provided is only informational and should be verified by a law practioner whenever possible. When confronted with legal issues contact an experienced attorney in your state who specializes in the area of law most directly called into question by your particular situation.Comment
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New to this... How would i know if I used my house as a tax shelter?
Thanks
HeartsComment
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Did you claim mortgage interest for the entire year?Originally posted by myhearts07 View PostFiled Ch 7 - 07/10/08
341 Meeting - 08/13/08
DISCHARGED! - 10/15/08
CLOSED - 10/20/08Comment
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I was just going to ask some questions for the original poster, but I just realized that this post is 4 years old.Comment
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Actually, I don't know. We stopped paying our mortgage in August of 2008. So, there was no more interest paid after that point. So we claimed up to that point, I believe. Will it make a difference if we did for the whole year or part of the year?
Thanks for your help.
HeartsComment
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Wouldn't you only be able to claim what the mortgage company sent you on a 1098 form?"Don't let your wants overload your a**"
(author unknown)Comment
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I know that was all we claimed. They wouldn't have sent anything out for more than what we were entitled too, I believe. I am not filing the BK7 shouldn't I get some type of injured spouse settlement from our tax return?Comment
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