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Received a cancellation of debt notice from chase bank that i had a $145k 2nd with. they are releasing the lien on the property.

Victorville, CA |
Filed under: Foreclosure

they also are going to report the cancellation of debt to the irs and credit bureaus though. does anybody know how this will affect my credit? good or bad? what tax consequences will i have with the irs?

Attorney Answers 2

Posted

Cancellation of a debt will affect your credit history. Your credit history will likely say that the debt was forgiven/charged off. With regards to the tax consequences, you should see a tax professional.

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Posted

my credit report has said that already for quite a while. but they were still trying to collect also. dont you think now it will be erased from my credit?

Posted

Cancellation of debt will adversely affect your credit. The magnitude depends upon many other factors regarding your credit history.

For more information on debt forgiveness, 1099-A, and 1099-C, see:

http://www.irs.gov/instructions/i1099ac/ar02.html

http://www.irs.gov/newsroom/article/0,,id=174034,00.html

There is also an IRS Publication 4681:

http://www.irs.gov/pub/irs-pdf/p4681.pdf

Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This Avvo.com posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.

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