One of the most frustrating aspects of any short sale or loan modification, is dealing with the bank loss mitigation department.  Any person having been through this process  can attest.  First, going through the process you realize that the collection department is different than loss mitigation.  In other words, even if you have an assigned negotiator, does not mean the collections people will stop their harassing phone calls, letters, certified mailings, emails and other threats, they will not.  Additionally, you might start receiving mailings from bankruptcy attorneys, etc.  Finally, once your credit has become impaired expect your credit card companies, irrespective of your payment history, to cut your credit lines.  They figure even if you have a 25 year on time payment history with them, you are now a credit risk.

 

If you have successfully completed a short sale with the assistance of The Short Sale Negotiator Congratulations, but your work is still not done.  Two important steps remain, first is the daunting task of figuring out how to put this on your tax return.  The Law Offices of Tucker & Associates, PLLC, and their CPAs, can assist you with individual income tax preparation.  Next weeks blog, will talk about some tax strategies.  The following week, we will talk about the final step, credit rehabilitation. 

 

Please be aware that the number reported on a 1099-C is not always accurate.  This week I had a client bring in a 1099-C where Wells Fargo had reported the debt forgiveness was $420,000.  After many consultations with Wells Fargo, where they first started with a derogatory, and holier than thou attitude, we were able to get it corrected to $290,000.  The $130,000 correction, is a difference in $52,000 in taxation to the client.  In other words, pay close attention to the details.

 

Make sure your 1099-C is accurate, double, triple check all numbers.  Wells Fargo had put their BPO number in the file, but this client had netted them $130,000 higher than their BPO, it was over a million dollar loan.  Again, next week we will be back with some insights on how you report this debt forgiveness.

 

Until then, make it a great week. Guest Blogger blog.thenegotiatedsolution.com

 

Lawrence Tucker, Esquire, MBA

Principal, Tucker & Associates, PLLC

Legal Counsel, for The Short Sale Negotiator

Submitted on Monday, February 16th, 2009 at 11:46 am