does a settlement on 2nd generate a 1099

[goingcrzy]

Hi all-

We have been discharged (7) and did not reaffirm the house. If we settle on the 2nd, does that generate a taxable event?

I assume it does, but I wasn't sure what the rules are after discharge.

Thanks

[JoeBankrupt33]

I'm assuming that you discharged the 2nd. In that case, I don't think you should get a 1099, since you don't have any legal responsiblity to pay for that debt. I may be wrong, though.

[DebtEnder]

You would get a 1099 as that is created whenever they wipe away debt. It however means nothing to you as you were no longer liable for the debt.

[goingcrzy]

Thanks!

One more question. If I do get a 1099 as Debtender said then how do I notify the IRS that I am no liable for the debt?

[justbroke]

Thanks!

One more question. If I do get a 1099 as Debtender said then how do I notify the IRS that I am no liable for the debt?

You may need to file Form 982 Forgiveness of Debt. Since you will probably get a 1099-A/C, you'll need to deal with it. In that case, I might think about having a "professional" (H&R Block type) do your taxes for the year in which you receive the 1099-A/C.

[HHM]

If you received a chapter 7 discharge, and settled the mortgage AFTER the discharge, there are no income tax consequences; meaning you won't have to pay income tax on the deficiency. But the bank might still issue a 1099, which will require you to complete IRS Form 982 but simply check the box for "the debt was included in bankruptcy."

[goingcrzy]

Makes sense.

Thank you very much for your help. Have a great weekend everyone!