Debt collection after foreclosure and sale

by Jenifer
(St Johnsbury, VT (USA))

I received a letter from a debt collector in regards to a large remaining balance from our home foreclosure sale (over $100k). This year I claimed close (difference of about $6k) to that amount as income on my taxes. I was informed by "the block" this would resolve the debt as paid. Do I still owe this debt? Any idea why the amounts would be different?
Thank you

Comments for Debt collection after foreclosure and sale

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Nov 11, 2009
Deficiency on home
by: Gerri


Without knowing the full situation, I would like to offer a few suggestions:

1. Was this your primary residence? If so, you may not have to pay taxes on the deficiency. Make sure you talk with a tax advisor if you haven't done so already.

2. Do you know if a deficiency is allowed in your state? Some states do not allow them on a primary residence.

3. Did you reach an agreement with the lender to release you from the deficiency? If so, you should have something in writing from them. If not, it's possible that the 1099 listing the deficiency could serve as an indication that they forgave the balance, but you will probably need help from an attorney to determine that.

Assuming you did not get something in writing from the lender agreeing to release you from the deficiency, you need to get legal advice asap. This is a very large amount of money and it's essential you find out what your options are now for dealing with it. Make sure you raise the tax issue with the attorney as well.

I would strongly recommend you
a free consultation with a bankruptcy attorney who can answer your questions about this deficiency and help you understand your options if it turns out you are responsible - as well as how to deal with the debt collector if you are not. The consultation should be free, and it is always confidential.

Please let us know what happens after you talk with the attorney.

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