Re: California Judicial/Non Judicial concern
Posted by dr on January 26, 2009 at 08:06:22:
In Reply to: Re: California Judicial/Non Judicial concern
Posted by Jim V on January 26, 2009 at 00:22:05:A purchase money 2nd does not become unsecured debt in CA. It was and is only secured by the home. In foreclosure all they can do if the 2nd gets nothing is send you a 1099 for forgiven debt, of which the tax issues arise.
BUT, if you qualify for the tax forgiveness act, that is not an issue either. If you dont quailify for it you can still claim insolvency at the time of discharge and use that to help with the tax issue.
In your link it even talks of those.
Sorry I could not give the direct cite, I used to have it on my desktop now its gone. I will dig it up again.
I personally am avoiding BK if possible but if not oh well. But the law is clear that purchase money rules were put in place to deter lenders from doing an 80/20 and to protect homeowners in the case of foreclosure.
The lender takes added risk with the 80/20 and rolls the dice.
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