Posted on: 27th Aug, 2007 01:58 pm
I have two properties that are currenlty in default and one is already on the way to foreclosure. That being said, I live in Florida so the deficiency judgement is a possibility.
I need to know how the deficiency judgement works. Do they issue a 1099 and you have to pay taxes on that income or do they actually make you pay the amount?
Any help will be greatly appreciated.
Thanks
I need to know how the deficiency judgement works. Do they issue a 1099 and you have to pay taxes on that income or do they actually make you pay the amount?
Any help will be greatly appreciated.
Thanks
Hi Ivy,
In case lender issues a 1099 then he cannot sue for getting a deficiency judgment. He can pursue any of the two.
If he issues a 1099, it will be for the difference between the sale proceeds and balance on the loan. You will have to report it as income and have to pay taxes on that amount as if it is an earned income.
Miller
In case lender issues a 1099 then he cannot sue for getting a deficiency judgment. He can pursue any of the two.
If he issues a 1099, it will be for the difference between the sale proceeds and balance on the loan. You will have to report it as income and have to pay taxes on that amount as if it is an earned income.
Miller
If court allows the lender to recover his dues through deficiency judgment then you will be liable to pay for the balance.
Hi Ivy,
If the lender does not recover the due balance of the loan even after foreclosure, he may grant a deficiency judgment against you in the court and may pass a lien on your other property for recovering the balance. After receiving the legal papers of the judgment, if you do not file an answer within 30 days, the court will presume it to be at default. As a result of this default judgment, you may have to pay a large amount of money. This will also end up showing on your credit report.
If the lender does not recover the due balance of the loan even after foreclosure, he may grant a deficiency judgment against you in the court and may pass a lien on your other property for recovering the balance. After receiving the legal papers of the judgment, if you do not file an answer within 30 days, the court will presume it to be at default. As a result of this default judgment, you may have to pay a large amount of money. This will also end up showing on your credit report.
A lender does not grant deficiency judgment against the borrower. Rather he seeks the judgement in court so that by order, he can demand the outstanding loan balance from the borrower.
Hi Alex,
I agree with you that a lender may ask or seek a deficiency judgment.
I agree with you that a lender may ask or seek a deficiency judgment.
I understand that they have to go through the court to be granted a deficiency so more than likely they will issue a 1099 and write it off right? If they do get a deficiency can they tag that amount on to my principal property which I have homestead on?
"I understand that they have to go through the court to be granted a deficiency so more than likely they will issue a 1099 and write it off right? "
In many cases they do so. But if they feel that there are chances that the dues can be recovered then they will go for deficiency judgment.
It depends on the specific situation.
In many cases they do so. But if they feel that there are chances that the dues can be recovered then they will go for deficiency judgment.
It depends on the specific situation.
Hi Ivy,
If you have a homestead on your principal residence, then the homestead exemption law will prevent the lender from placing any lien on your house as part of the deficiency judgment.
If you have a homestead on your principal residence, then the homestead exemption law will prevent the lender from placing any lien on your house as part of the deficiency judgment.
Do IRS work with you on the imputed income from a foreclosure and a 1099 ?