Insolvency - Lets start talking about it!

[pjd123]

I've been at Loansafe for a few months now. I've noticed that the tax and insolvency topic seems to be one thats not addressed. I know there are some of us here in California that are trying to figure it out. Has anyone gone this route or does anyone know anything about it? Here is my understanding: You are insolvent when your assets are less than the taxes you owe - My example: I owe $420K on my house. We're in the foreclosure process. My home is worth roughly $310K-$359K. I did use some equity for paying off bills etc so I'm expecting a 1099 for about $100K. I will have to ADD that as income when I file next year. I have about $35K in other debt, credit cards and car payments. I have no real assets of value - say $10K if I were to sell my furniture and computer, etc. Here is the confusion: My understanding was that I wouldn't pay ANY taxes because I owe more taxes than I have in assets. Another friend here reads it to understand that the $35K will be ducted from the total income leaving me with a new adjusted income that I will then have to pay taxes on. My CPA assured me I wouldn't owe but now I'm concerned.

I realized taxes are kind of a 'taboo' subject here, but if anyone has any input, we'd really appreciate everyones input, even if its just an opinion.

Thanks all!

pjd123

[KT in CA]

Psssttt...look on the other thread.

Karen

[spj3210]

Which thread is that? Thanks!

[KT in CA]

The New Friends Chat thread. That is where our conversation originally started. Come on over!