Valued Contributor
Posts: 1,063
Registered: ‎05-26-2010
Re: How Settling a 2nd Mortgage After Bankruptcy Affects Your Credit

The debt was discharged in Bankruptcy.  Now if you settle the second to extinguish the remaining security interest, since the debt was already discharged you had no financial obligation, so  there is no cancellation of debt to give rise to a taxable event.


If the lender insists on issuing a 1099, fill out a form 982 showing that in fact you made a voluntary partial payment on a discharged debt.

BK7 Filed 8/11/2009 Discharged 11/23/2009. Purchased new home 4/11/2012
Starting Score:11/16/2009 EQ 566 11/16/2009 TU 538
Interim Score: 12/27/2012 EQ 683 09/17/2012 EX (lender) 670 1/01/2013 TU 701
Current Score: 11/06/2013 EQ 708 11/06/2013 EX 702 11/16/2013 702 11/06/2013 TU 729
Goal Score: EQ 740 EX 740 TU 740
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