looking for advice

[spicolli1975]

deleted

[JRScott]

1. Possibly CA is a communal property state, however since the debt was incurred before your marriage I'm not sure she could be held responsible, so as you are planning might be better to bk before then.
2. I'm not sure, being a court ordered amount probably not.
3. Not sure of wage garnishment laws in CA, if they allow it then yes.
4. If you work on rebuilding your credit most folks can get a home in about 2 years with a FHA backed loan.
5. Yes you could try however you would get a 1099 for the forgiven amount and owe taxes on it as though it were income.
6. They could be pulling your credit report but not finding you in shape yet to do anything to. So yeah probably wishful thinking.

[fltoo]

So happy you are well.

IMO, I would not contact them and let the SOL take over. See how long you can get by without any word from them. Very good chance they won't pursue it.

If by some chance they do, then and only then would I think about a BK.

Contacting them will only start the SOL time period again.

Check the web for SOL on medical bills in Cali. It might only be 4 yrs.

[soleprop]

OP, congratulations on your pending marriage and your alive and wellness!! don't let the debt issue take the glow off of that .


JRScott, a maybe-silly question - but one I haven't realized i had til i read your response to OP:

5. Yes you could try however you would get a 1099 for the forgiven amount and owe taxes on it as though it were income.

is this true for all debts discharged in BK? i.e., we have to pay taxes on the amount discharged in the tax year it was discharged? clear me up - thanks!

[BK2008]

[QUOTE=

is this true for all debts discharged in BK? i.e., we have to pay taxes on the amount discharged in the tax year it was discharged? clear me up - thanks![/QUOTE]

No, Items discharged in BK are not 1099-able.

Foreclosures done outside of BK with a balance due to the lenders would be.

[soleprop]

good to know, superthanks!!

[fltoo]

No, Items discharged in BK are not 1099-able.

Foreclosures done outside of BK with a balance due to the lenders would be.

There is an exception to this also. I am still working on researching it. Maybe someone here already knows the answer?

[FreshLikeADaisy]

Um... a couple of points.

If you meet the IRS standards for insolvency in the year that you have forgiven debt (including when you settle with a lender for less than owed and receive a 1099) you do NOT have to pay taxes on that forgiven debt. If you go to www.irs.gov and do a search on "insolvency" you'll find the publication that talks about it. Chances are very good that if you are in bk or close to one, you meet the IRS standards for insolvency.

Also, not every foreclosure (especially now!!!) results in deficiency forgiveness and a 1099-C. If they get a deficiency judgement for the entire amount owed, there's nothing forgiven and no tax liability.

Note that a pre-bk foreclosure that results in a deficiency balance (or any balance due) is discharged in a Ch7 bk. Taxes are NOT due on debts discharged in bk. Also, in a Ch7, unless the mortgage is specifically reaffirmed, you're doing what's called a ride through and you can walk away from the house at any time. Technically, it will be a foreclosure, but since the debt was already discharged in the Ch7 it doesn't much matter. Ride-throughs are not provided for in the new bk law, but people are still doing them, so...

Ch13 is a whole 'nother story, maybe someone can chime in on that. Hope this helps. Good luck!!!

P.S. Check this out... http://www.irs.gov/newsroom/article/...174034,00.html