She needs to see a bankruptcy lawyer as quickly as possible. She will receive a 1099 C regardless of whether or not the forgiven debt is taxable. Bankruptcy might not be needed for her to avoid taxes on the forgiven debt. If bankruptcy is required to avoid taxes, it needs to be filed before the foreclosure.Yes, she does need to get with her attorney - who BTW was the person who told her she would be receiving the 1099 for the debt. What she tells me is the forgiven debt cannot be counted as income on her taxes. It would be income she really does not have, but would affect the funds her children currently receive from FAFSA/loans/grants/scholarships for college.I sent her the link from Phil and hopefully she is reading it!Thanks for your input in this mess.Birgit
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