Montcalm County, MI Bankruptcy Law Firms & Lawyers

Your obligation on the deficiency will be discharged in a subsequent bankruptcy. But from the issuance of the 1099-C, it looks like the deficiency was forgiven. The taxes, if any, due on the 1099-C, which I take it arose from a pre-bankruptcy transaction, are another story. Many tax preparers seem not to understand the law on this whose key point is that your taxable income from a forgiveness of debt is limited to the amount by which the forgiveness makes you solvent. Consult an accountant (or lawyer) very well-versed in taxation.

Somehow I suspect that there is more to this story than you are letting on because creditors just do not engage in these kinds of activities without there being some exceptions. If this creditor financed the purchase of property, whether it was a TV set, jewelry, or home repairs, it may have a lien under the UCC that allows the creditor to repossess the property unless you pay. And since most people would want some kind of warning before having their A/C ripped out in 110 degree heat, you might want to consider making a deal with this creditor in order to keep the property. The other scenario is the creditor who is a former friend or a family member. They are doing this because they do not know any better, and a sharply worded letter from your attorney might be enough to chase them away.