Expert: Mark J. Markus- California Bankruptcy Attorney - 10/6/2008

Question
Can they do this, the mortgage company, this was for &48,000.00. I now owe the IRS $24,000.00 because of this. They were included in the bankruptcy.

Answer
This is a very complicated area of law, so I cannot give you a yes or no answer to this.  However, as a general rule, if the underyling mortgage debt was discharged in your bankruptcy case, then pursuant to Internal Revenue Code 108, there should not be any forgiveness of debt income to you.  There are exceptions to this, however, and you would need to enlist a very competent tax attorney who is familiar with bankruptcy-related issues.  For example, it may depend on the timing of when the foreclosure sale occurred (whether it occurred before or after the bankruptcy case was filed).  But generally, if it occurred after the bankruptcy, you should not be liable for those taxes.  But again, you really need to consult with a tax attorney on this.