DoI still get a 1099 if I declared bankruptcy, no reaffirmation was signed, and the house was finally transferred via a deed in lieu?

UPDATED: Dec 28, 2010

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DoI still get a 1099 if I declared bankruptcy, no reaffirmation was signed, and the house was finally transferred via a deed in lieu?

I filed chapter 7 in 2004 and kept my house and car but never signed a reaffirmation. This was my primary home at the time but a few years later I got married and that house became a vacation house. After I could not sell it this year, the mortgage company did a deed in lieu with me. Now I am concerned about the 1099. Will I still get it even though it was listed in the bankruptcy in 2004? It still is not my primary house so I know that I will not get out of it for that reason. I am trying to save as much money as I can because I am freaked out about the 1099.

Asked on December 28, 2010 under Real Estate Law, Michigan


MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

What is confusing in your situation is the combination of a Chapter 7 (full discharge) and ability to keep the home.  Was this homesteaded and so during your negotiations you were able to keep the home because the homestead amount matched what you owed? It sounds as if paperwork wasn't correct and what should have happened in 2004 was you would have lost ownership of the house.  At this point, you should check the deed registry to see if there is a cloud on title and if that is the reason you lost the home.  A deed in lieu is an alternative to foreclosure and you need to find out if indeed you will under the Obama plan not have a 1099 (i.e., not have to declare any income as a result of the deed in lieu).

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