Received a Form 1099-C from bank that forgave a mortgage we were no longer obligated to repay.

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   Anne-Marie BowenPro

   Orlando Bankruptcy Attorney

   Contributor Level 10

   

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   Answered February 08, 2013 11:32. You need to take the 1099-C to your CPA or accountant who will know how to handle it with the IRS. There is a Form 982 which he/she will prepare that advises the IRS that you should not have to pay any income taxes on the "forgiven debt" because you received a discharge in bankruptcy. Bankruptcy is one of the exceptions to people having to pay income tax when a creditor forgives , settles, or writes off a person's debt. Remember that the IRS will receive the 1099, so do not ignore it.

   The above information does not establish an attorney-client relationship and is based upon the limited information... moreThe above information does not establish an attorney-client relationship and is based upon the limited information the questioner provided. Unless you have signed a representation letter and paid a retainer, you are not a client of the firm. You should seek legal advice from an attorney in your area if you want a full legal opinion in this matter. less

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   Michael AvanesianPro

   Glendale Bankruptcy Attorney

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   Answered February 08, 2013 11:54. I agree with my colleague. The banks have been doing this lately.

   The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may... moreThe above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here. Please visit my web site: www.avanesianlaw.com for more information about my services. less

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3. 

   Diane L Gruber

   West Linn Bankruptcy Attorney

   Contributor Level 17

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   Answered February 08, 2013 14:01. Take this 1099C to a tax preparer ASAP along with your bankruptcy petition and your Discharge notice. If you did NOT reaffirm the debt, it was wiped out in the BK. Good luck.

   Be sure to designate "best answer." If you live in Oregon, you may call me for more detailed advice, 503-650-9662.... moreBe sure to designate "best answer." If you live in Oregon, you may call me for more detailed advice, 503-650-9662. Please be aware that each answer on this website is based upon the facts, or lack thereof, provided in the question. To be sure you get complete and comprehensive answers, based upon the totality of your situation, contact a local attorney who specializes in the area of law that involves your legal problem. Diane L. Gruber has been practicing law in Oregon for 26 years, specializing in family law, bankruptcy, estate planning and probate. Note: Diane L. Gruber does not represent you until a written fee agreement has been signed by you and Diane L. Gruber, and the fee listed in the agreement has been paid. less

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4. 

   Matthew Berkus

   Denver Bankruptcy Attorney

   Contributor Level 16

   Answered February 12, 2013 09:06. Can a bank issue a 1099-C after bankruptcy....
   1. Is it legal, yes.
   2. Is it an error, no.
   3. is it required, no.
   
   If anyone actually reads the instructions and IRS regulations regarding 1099-C's, you will learn that a lender is not "required" to issue a 1099-C on debt discharged in bankruptcy, but it is not forbidden from doing so. As such, it is NOT an error.
   
   A 1099-C is merely a reporting document. All it does is tell the IRS that a potentially taxable event occured. If you recieve a 1099-C, and assuming the debt was discharged in bankruptcy, the debter need only file IRS Form 982, check box 1(a), write the amount in box 2, and bam, no tax liability on discharged debt.

   • Video Explaining 1099-C After Bankrutpcy

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