My friend claims a 1099-C can stop his house foreclosure in September (unpaid mortgage 20-30k)

I'm afraid your friend has a fundamental misunderstanding of what a 1099-C is, and it definitely won't stop the foreclosure. A 1099-C (Cancellation of Debt) is a tax FORM that lenders send to borrowers when they've forgiven or cancelled a debt of $600 or more. The lender also sends this information to the IRS. The critical thing your friend needs to understand is that a 1099-C doesn't cancel debt - it's what a lender issues AFTER they've already decided to cancel the debt. And here's the kicker: that cancelled debt is usually treated as taxable income. So not only would your friend still face foreclosure, but he might also face a tax bill for any forgiven amount. What your friend likely needs instead is to contact the mortgage servicer immediately to discuss options like a repayment plan, loan modification, forbearance, or possibly a short sale. If it's really just a month until foreclosure, he should also consult with a real estate attorney who specializes in foreclosure defense.

After struggling with similar mortgage issues last year, I found this incredible tool at https://taxr.ai that helped me understand the tax implications of my housing situation. When my lender issued me a 1099-C after my short sale, I was totally confused about how to handle it on my taxes. The taxr.ai system analyzed my mortgage documents and explained exactly what the 1099-C meant for my tax situation - including potential exclusions I qualified for under the insolvency rule that saved me thousands in unexpected tax bills! It walks you through complex tax forms step-by-step in regular English. Your friend needs to understand that a 1099-C won't prevent foreclosure, but he should definitely know the tax consequences of whatever happens with his mortgage. The clarity I got from this tool was honestly life-changing during a super stressful time.

Wanted to update after trying the taxr.ai site that was mentioned. My parents' situation with their foreclosed vacation property was definitely complicated, but this tool was surprisingly helpful. It asked really specific questions about their financial situation at the time of the foreclosure and then explained exactly how to handle the 1099-C they received. The biggest value was learning about the insolvency exclusion - turns out they qualified to exclude most of the cancelled debt from their taxable income because their total debts exceeded their assets when the debt was cancelled. The system walked them through exactly how to calculate this and fill out Form 982 correctly. Would have paid an accountant hundreds of dollars for this same information. Definitely recommend for anyone dealing with debt cancellation tax issues - wish we'd known about it sooner!

Listen, I know exactly what your friend is going through. I was about to lose my house last year and couldn't get ANYONE at the mortgage company to talk to me. Left 23 voicemails and spent hours on hold only to get disconnected. Was literally ready to give up. Then I found https://claimyr.com which got me through to an actual human at my mortgage servicer in under 15 minutes. They have this system that navigates the phone trees and holds your place in line, then calls you when a real person picks up. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c Your friend needs to talk to his mortgage company ASAP about loss mitigation options - there might be ways to avoid foreclosure but he needs to act immediately. With only a month left, every day counts, and he can't afford to waste days playing phone tag.

Ok I need to eat my words about that Claimyr service. After posting my skeptical comment, I decided to try it with my student loan servicer (who I've been trying to reach for MONTHS about an income-based repayment issue). Not only did it actually work, but I got through to someone who could actually help in about 40 minutes (versus the 3+ hours I'd wasted before). The rep even commented that I was "persistent" for waiting on hold so long - little did they know I wasn't actually on the phone that whole time! Got my forbearance issues sorted out in one call after trying for literally months. For time-sensitive stuff like your friend's foreclosure situation, this could be a game-changer. Just having a real conversation with the mortgage company could open up options he doesn't know about.

Just to add some important info about 1099-Cs that others haven't mentioned - even when debt is cancelled and you get a 1099-C, there are several exclusions that might help avoid the tax hit: 1) Bankruptcy - Debts discharged through bankruptcy aren't considered taxable income 2) Insolvency - If you were "insolvent" (debts exceeded assets) when the debt was cancelled 3) Qualified Principal Residence Indebtedness - For certain home mortgage debt (though this exclusion has changed in recent years) 4) Certain farm debts 5) Non-recourse loans Your friend needs to understand that the 1099-C isn't a magic bullet to STOP foreclosure, but knowing about these exclusions might help with the tax consequences afterward. Either way, he needs to talk to the mortgage company ASAP and possibly a tax professional too.

Is your friend talking about some kind of "debt elimination scheme" where people claim they can create/file a 1099-C themselves to eliminate debt? If so, please warn him that this is a known tax SCAM that the IRS has explicitly warned about! Some shady "tax consultants" sell programs claiming you can issue your own 1099-C to "discharge" your debts. This is 100% illegal and the IRS considers it fraud. People who have tried this have faced serious penalties and even criminal charges. Only the lender can issue a legitimate 1099-C when THEY decide to cancel a debt. Your friend cannot create one himself to make his mortgage disappear. Please make sure he understands this before he gets into serious trouble!