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Type of bankruptcy. What it means for you. Chapter 7. Often referred to as liquidation, this type of bankruptcy means selling off your non-exempt assets to repay your debt.
Chapter 7 bankruptcy. Leslie Tayne, attorney and founder of Tayne Law Group in Melville, New York, says you’re eligible for a mortgage a few years after a Chapter 7 discharge of debt.
As part of Chapter 7 bankruptcy, your credit card debt is typically discharged immediately. On the other hand, Chapter 13 bankruptcy focuses on reorganizing your debts.
Cancelled mortgage debts are not always taxed by the IRS. There are some occasions when the borrower is exempted from paying any tax on the forgiven mortgage loan amount. Some of the exceptions are as follows: [5] Qualified principal residence indebtedness – This exception has been offered under the Mortgage Debt Relief Act of 2007 and it is ...
For example, in a Chapter 7 case only an individual debtor (not a corporation, partnership, etc.) can receive a discharge. [39] The effect of a bankruptcy discharge is to eliminate only the debtor's personal liability, [40] not the in rem liability for a secured debt to the extent of the value of collateral. The term "in rem" essentially means ...
Taxpayers in the United States may have tax consequences when debt is cancelled. This is commonly known as cancellation-of-debt (COD) income.According to the Internal Revenue Code, the discharge of indebtedness must be included in a taxpayer's gross income. [1]
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