Need*Immediate* Help

[feelingnutsy]

I filed C7 in November and had my 341 on Dec.23,2010.

I'm now awaiting discharge in Virginia.

I gave my house up in foreclosure---and it has since been sold.
However---there was a $97,584.30 HELOC on it---which I listed
in my BK---per my lawyer's advice.

However---my husband---who resides in Florida for health reasons---
on a fixed income---didn't file---and WF has since gone after him for
this amount.

We've now both received 1099's for the above amount---and
I'm freaking.

What should I do?

I'm trying to get back on my feet and just can't afford to pay anything
on this amount for taxes---but what choice do I have?

I've got a call in to my bk attorney---but haven't heard from him yet.

Meanwhile---my husband is looking into filing bk in Florida to clear the HELOC
and a credit card debt.

Our accountant says that we have to list it.

***Please help***.

Nevertheless---we're facing this horrendous amount for 2010 taxes.

Our accountant says we have to list this for 2010 taxes.

[SunshineGal]

Relax and take a deep breath. Yes, you will have to list the 1099C, but since you filed BK you should not have to pay taxes on it. Do a forum search for 1099C and you'll find a bunch of threads on this topic. I don't know what to tell you about the ex-husband though.

[justbroke]

I highly suggest that you have a professional tax preparer do your taxes for you. You say that you have an accountant, but the accountant didn't mention IRS Form 982? Because you filed Bankruptcy, you can use Form 982 to exclude the "forgiven debt" (form 1099-A/C) from your taxes. However, your husband cannot. Wells Fargo is correct in pursuing him since he did not discharge the debt.

Your husband should also seek professional tax help. If he can prove that he is insolvent, he can also use Form 982, but his preparation of that form will be different because he did not discharge the debt in a bankruptcy.

Do you file taxes jointly?

[feelingnutsy]

Thanks for the info---just broke---and our accountant is also a professional tax preparer---
and he didn't mention form 982.

My husband is getting ready to file C7 in Florida---to list this debt and some credit card debt---
but I'll pursue the angle of his filing Form 982 without having to file C7

We do file taxes jointly.

[feelingnutsy]

Thanks for the info---SunshineGal---and this helped me not to flip out.

[justbroke]

Thanks for the info---just broke---and our accountant is also a professional tax preparer---
and he didn't mention form 982.

All I can say is... wow. Perhaps the accountant is not familiar with bankruptcies. And, actually, I'm not sure that your husband can use 982 unless he filed bankruptcy as well. It would be interesting to see what a tax expert that has dealt with bankruptcy and forgiveness of debt, when there are married taxpayers where one spouse did not file!

I think what he needs to do is follow the Mortgage Forgiveness Debt Relief Act, that runs through 2012 I think. Don't quote me, but there is some procedure if this is a principal residence.

I'd go back to the tax accountant and ask about both Form 982 for your discharge and the Mortgage Forgiveness Debt Relief Act as it may pertain to both of you. Yes, I agree that you do need to list it, but whether you have to actually pay taxes on the amount, is the real question. Hopefully the answer to the taxability is that it is not taxable income.

[SunshineGal]

Hi feelingnutsy,

Sorry, I somehow missed the fact you are still married with him living in Florida. I think I would make a call to a different accountant who is familiar with the 982 form.

Please let us know what you find out.

SG