I have a question that I need answered, Please help!!!! Here is the short version.....
I am a self employed truck driver that is barely scraping by with $4.00 a gallon fuel and hardly any freight in this economy. My wife mostly homeschools our 2 young children, except for a little part-time work here and there. I do my taxes at the end of the year, and have gotten back +/- $4,000 for the past 3 years from the IRS, so I don't make much. Our home of 10 years was foreclosed on by Wells Fargo in June of 2012 in Seminole County,Florida. We are currently renting in TN since my wife needs to be close to a friend that is dying of cancer, but plan to return to FL in April 2013. I am driving my truck in Florida. We are also renting a room from my mom to keep our FL residency current and continuous for 37 years. Now the 2 questions - We received 2 separate 1099A forms ($120,000 1st mtge, and $50,000 2nd mtge) both from Wells Fargo. Since this was our primary residence, and other than a beat up old truck (value about $15,000) and a 10 year old car, thrift store furniture/clothes and school supplies, we are basically insolvent. I'm 50 years old with no retirement, insurance, or anything else. We also have another $40,000 in other current debts that I am not so concerned about. Do we need to borrow money to try and file for bankruptcy to avoid owing taxes on the $170,000 on the 1099A forms, or will my presumed insolvency take care of that issue. What about getting sued in the future by Wells Fargo?? What is my best move before I do my taxes for 2012???
Thank you and God Bless,
1 Answer from Attorneys
Bankruptcy will not resolve current income tax liability. Check your 1099A's whether it is
included in income for 2012. There are many exceptions. Regarding the foreclosure, few
mortgage holders pursue defendants for deficiency judgments. You can check the court
order to determine if there was a deficiency judgment; if there was not, you will not be
sued by Wells Fargo. Generally, on foreclosures and forgiveness of loans for homestead
properties, it is not added to income so your income tax liability for 2012 should not be affected by the foreclosure.
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