Question: Idaho laws? Balance at time of foreclosure 465K, opening and closing bid 247,500 sold back to lender. How many days to file deficiency judgment and 1099? Can the lender do both, send a 1099 and file deficiency judgment?
Answer: – Typically they will choose to either 1099 you or file a deficiency judgment. Not both. In terms of when that will happen, your guess is as good as mine. Usually it’s pretty quick. Sometimes it takes a little while. There are other factors that also influence when they will issue the 1099 or judgment. Like what lien position they are in. It makes a difference whether they are in 1st position or 2nd position. A lot of times, the 2nd lien holder will not file for a very long time, sometimes up to several years before you see anything. I’m assuming in this case you are referencing a 1st lien holder so my guess it that you will know something very quickly.
The most common outcome is a 1099 from the 1st lien holder. So really what you have to be aware of are the tax obligations. They will count that deficient amount as income to you. So make sure you have a good accountant who can usually counter that tax obligation by claiming insolvency. Usually that’s a far better option that bankruptcy or having to work out a payment plan to pay back the amount that is deficient.
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