Does Foreclosure Require Filing Bankruptcy?

[SinkingFast]

Please forgive my dumb questions,
Is the 1099 tax based only on the "forgiven" difference between the price that the lender eventually recieves upon sale of the property, and the unpaid mortgage balance + expenses? This we could manage.
I was under the perhaps mistaken impression, that the entire defaulted 180k would be counted as taxable income - no way we could afford that.

Our concern for avoiding filing for BK if possible, has been the risk and worry that my wife would be required to surrender to the BK trustee for sale, the vehicles and equipment that are necessary for her to continue her self-employed small business, all of which are owned free and clear. (having a total value of under $10,000)

First off,.............. Is your wife's business incorporated in any way. And are the assets you speak of owned by the business or yourselves personally??

Second,......... The Lender is not gonna just want what your mortgage balance is. We managed to sell our house literally out from under the brink of Foreclosure. The Lender added all lates, penalties, interest, fees, and legal costs of the Foreclosure on top of our mortgage pay-off. That was a neat, tidy extra $8K. So if you OWE the bank $185K, by the time the house actually Forecloses, the pay-off could easily be $10K above that. AND then, the Lender will have more expenses they will add to your balance. Any fix up. Lawn care. Winterization, if necessary. Anything they do to the house while the Deed is still in your name gets added to your tab. Because, until the Lender gets the Deed over into their name, you still technically, legally own the property.

[Hillbilly]

I was a little slow in replying to the above questions as we have been involved in moving our first load of belongings to the home that we purchased in another state, so yes, as I stated in my first post, we now have two homes, the one that we have owned for thirty-one years, and which we can no longer afford the large mortgage payments on, and a much less expensive home located 500 miles away.
We don't regard it as having our memories foreclosed on, the kids are now adults and on their own. Our daughter and her husband, the only ones living nearby, are planning to also be moving and joining us there. Plus with many other family members being located in the community that we are moving to, we will have no difficulties in making lots of new memories.
Also my daughter and son-in-law live right next door, and will continue to maintain the property until foreclosure.

My wifes business is not incorporated, and all of its assets are personally owned, with a marketable value of less than $10,000

We used to have a retirement savings account, to which I had contributed weekly for 25 years, but keeping up with our mortgage payments totally depleted it down to a $0 balance last year, the primary reason that we can no longer proceed as in previous years.
Refinancing to lower the payments is not a viable option, sooner or latter an even bigger catch-up payment would become due, and no large increases in income are in any foreseeable future.

We have been meeting whatever expenses exceed my pension with loans from family members for months now, and they are expecting their repayment from our seasonal business profits.
Thus we can not risk being forced to surrender or discontinue our business by a premature filing of bankruptcy.

We have had local inquires about selling, which may hold some hope, but we cannot proceed far in that direction until at least Sept-Oct when our business season will be over, and we will have the time to finish moving and preparing the place for sale.


If I correctly understand the above replies, in our case there is no advantage for us in filing BK before the foreclosure is complete, as any remaining debt would be dischargeable then, if and when the circumstances required.