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Non-Bankruptcy Question
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Hello David:
What is the taxpayers tax bracket? If its the 35% bracket, the borrower
will need to pay the IRS $35,000 to satisfy that obligation. Why? Because
the 1099-COD is income, under 26 USC 108, unless the taxpayer can prove the
benefit of one of the loopholes.
I suspect you know this, and youre asking the meta-question: Why, given
that the lender cant prosecute a deficiency judgment in California, and
thus the borrower owes nothing after the foreclosure?
(Questions which may become relevant: is the debt recourse debt? Is the
property a principal residence?)
Because the individual owed $500,000 the moment before the foreclosure, and
after the foreclosure he owed nothing, and thus got a windfall of debt
cancellation; but he gave up an asset that turned out to be worth $400,000,
so it was a trade (if involuntary) of one asset for the cancellation of debt
worth more. The taxpayer is better off after the foreclosure than before.
- John D. Faucher
On 6/9/10 4:19 PM, "David Tilem" wrote:
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> Bank is owed $500,000 secured by Property.
> Property is worth $400,000.
> Bank issues Form 1099-COD for $100,000
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> Question 1: How much must borrower pay to fully satisfy the obligation?
> Question 2: Why?
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> Remember: NO BANKRUPTCY INVOLVED
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> David A. Tilem
> Certified Bankruptcy Specialist*
> Law Offices of David A. Tilem (a debt relief agency)
> 206 N. Jackson Street, #201, Glendale, CA 91206
> Tel: 818-507-6000 Fax: 818-507-6800
>
> * Bankruptcy specialist cert. by State Bar of CA Bd of Legal Specialization.
> Business bankruptcy specialist cert. by Amer. Bd. of Certification
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>>> - John D. Faucher
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Re: [cdcbaa] Non-Bankruptcy Question
Hello David:
The post was migrated from Yahoo.
Bank is owed $500,000 secured by Property.
Property is worth $400,000.
Bank issues Form 1099-COD for $100,000
Question 1: How much must borrower pay to fully satisfy the obligation?
Question 2: Why?
Remember: NO BANKRUPTCY INVOLVED
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
Message
Bank is owed $500,000
secured by Property.
Property is worth$400,000.
Bank issues Form 1099-COD
for $100,000
Question 1: How much must
borrower pay to fully satisfy the obligation?
Question 2:
Why?
Remember: NO BANKRUPTCY
INVOLVED
David A.
Tilem
Certified Bankruptcy
Specialist*
The post was migrated from Yahoo.