QUESTION
Do they still have Bankruptcy protection or will they pay capital gains on forgiven debt next year for property in Ch 7 with 1st & 2nd lien-underwater
Asked on Aug 14th, 2013 on Foreclosures - Wisconsin
More details to this question:
Divorced Husband wants to do Short Sale because the 1st lender is threatening to foreclose. Husband feels it a Short Sale will have less of a negative impact on their credit. Divorced wife who was allowed possession has abandoned home but will not agree to Short Sale listing and offer on the vacant home.
2 ANSWERS
General Law Attorney serving Cherry Hill, NJ
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Mark S. Cherry, Attorney at Law, PC
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If the Chapter 7 happens first, that is when the debt is discharged. The ultimate sale does not generate the debt forgiveness if post- bankruptcy. There are exceptions to debt forgiveness on a principal residence plus read IRS publication 4681.
Answered on Aug 15th, 2013 at 7:51 PM
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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Who was allocated the mortgage in the divorce decree or marital settlement agreement? If it was allocated to the wife, the husband can probably discharge the debt in a bankruptcy.
Answered on Aug 15th, 2013 at 7:36 PM