Last year, we lost our business and in turn, lost our home and rental. They went into foreclosure and were sold for less than we owed. We have since gotten 1099s from the mortgage companies. So basically, they are saying we profited this astronomical amounts, and we didn't. Is there a way around this? What do we do?

You were given a 1099 for the difference between the sale price and the amount owed. This is technically income.

You probably cannot do anything about it besides set up a payment plan with the IRS.

I am unsure if bankruptcy can mitigate taxes owed but I don't *think* it does.