Surrendered chapter 13 second home

There is no way to know how quickly a creditor will foreclose on a home. I have had some clients that have lived in their home without making a mortgage payment for more than 3 years before the lender finally foreclosed. The length of time that a foreclosure taxes varies from state to state. If a mortgage creditor does not file a proof of claim, the creditor does not receive any funds from the chapter 13 trustee and the debt is discharged when the discharge is granted as long as there was a provision that provided for the treatment of the claim in the plan that would result in a discharge. It sounds like your plan had similar language. Use IRS Form 982 entitled "Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment" and attach it with your tax return in the year that the creditor states that the debt was cancelled, forgiven or discharged. If that return has been filed, then file an amended return and attach Form 982.

You seem to have an attorney and you should be asking him/her these questions. There is no telling how long it will take for the mortgage creditors to get around to foreclosing. I've had clients who surrendered homes remain in those homes for years after the surrender took place. It is a business decision for the creditor and depends on local market conditions. In the mean time as long as the home remains in your name you continue to be responsible for taxes and keeping it insured (not to protect the mortgage companies' interest, but in case someone goes on the property and is injured and sues you). I think the fact that they did or did not file a proof of claim is irrelevant. If you specified that you were surrendering the home and you eventually get your discharge, you will not be on the hook for the payments to the mortgage creditor(s). As I said above, you will still be responsible for the upkeep of the yard due to municipal and county ordinances which may require that you keep the lawn mowed and you should keep the property insured. If the mortgage company sends a 1099 to the IRS, you should file an IRS form 982 with your return which will advise the IRS that the debt was discharged in a bankruptcy.

A secured creditor who does not file a POC, is not entitled to receive plan payments. But, absent some specific language in your chapter 13 plan (confirmed), the mortgagee's lien rides through bankruptcy unaffected. This means they can foreclose after the case closes or they can file a motion for relief seeking permission to foreclose while the case is still open. In response to your inquiries: 1. Who knows, you or your lawyer should contact the mortgagee/bank to ask about foreclosure. 2. Any deficiency as a result of the anticipated foreclosure should be discharged as part of your case. So, you shouldn't be personally liable for any deficiency but that should be listed in your plan. 3. 1099c income, a/k/a debt forgiveness tax liability can be discharged in bankruptcy. Again, if this was scheduled and noted in your plan you should be all set; otherwise, your lawyer might need to amend schedule E to reflect 1099c.