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2 people on mortgage, one filed for bankruptcy who pays taxes on 1099c
My bankruptcy attorney had myself and my partner sign papers to show that the split on the ownership of the hous was 95/5. I own 95% I filed bankruptcy 2 years ago. I know that I don't pay taxes on the cancellation of debt and according to the bankruptcy attorney my partner should only pay 5% of the total cancellation of debt. However my accountant said that is not right and is making my partner pay 100% Why would I sign the papers for a 95/5 split that went to the short sale closing? The other issue is that Bank of America issues the same 1099c to both of us... it showed 100% of the cancellation of debt. Shouldn't they of split the 1099c 95/5?
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Comment on Fr_Chuck's post
No.. he did not but I did. Yes he owes on the cancellation of debt... we know that but because it was a 95/5 split doesn't he only owe on 5% of the cancellation of debt. Not 100% and shouldn't the bank have issued a 1099c for me that had 95% of the cancellation oif debt abd a 1099c that had 5% for him?
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If you were both co-signers of the mortgage then you are both fully responsible for making sure the mortgage gets paid. It doesn't matter how much each partner is said to own of the house. In fact, in many instances a cosigner may be a parent or partner who has no ownership interest whatsoever in the property. That's why banks like co-signers, and insist on a co-signer if the property owner has poor credit. So by signing for the mortgage your partner took responsibility for covering any shortfall of yours. Since he didn't meet that obligation, he in turn has defaulted as well. Hence the 1099-C that he received for the full amount. From IRS instructions for lenders to multiple debtors Instructions for Forms 1099-A and 1099-C (2011) : For debts of $10,000 or more incurred after 1994 that involve debtors who are jointly and severally liable for the debt, you must report the entire amount of the canceled debt on each debtor's Form 1099-C. Multiple debtors are jointly and severally liable for a debt if there is no clear and convincing evidence to the contrary. If it can be shown that joint and several liability does not exist, a Form 1099-C is required for each debtor for whom you canceled a debt of $600 or more. |
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