What happens if I don’t file a bankruptcy and I lose my home or other real estate in a foreclosure?
There are two bad things that can happen to you. If the mortgage company sells your home for less than the amount of the mortgage, then;
you
could be required to pay income taxes on the difference between the sale
price and the balance of the mortgage. Income from “relief of debt” is
taxable income. This income occurs when the mortgage company decides that it
will not sue you for the deficiency. The mortgage company will send a form
1099 to the IRS showing that you have received income equal to the
difference between the sale price of your home and the mortgage.
the
mortgage company could sue you for the difference between the sale price of
your home and the balance of the mortgage. The mortgage company has four
years to bring suit against you for the “deficiency” on the sale of your
home.