Can Lender Sell Note and Also Report 1099-C

[need_help-GA]

My question involves a foreclosure in the State of: GA

If a HELOC lender sells the deficiency loan left after foreclosure to a debt collection company for a discounted amount, can they still send a 1099-C to IRS for the difference?

It seems to me that if they sell the note at a loss, they can't report the difference as "forgiveness." They can only send a 1099-C if they are truly writing it off and forgiving the balance.

Please clarify and correct me if I'm wrong. I'm trying to figure out if we have to deal with a judgment and also deal with paying tax for the 1099-C on the same loan.

Thank you.

[Mr. Knowitall]

A write-off is an accounting entry. It has nothing to do with "forgiveness", nor does it prevent a later effort to collect a valid debt.

[OhMy]

A new law was passed that you can no longer be sent a 1099-C if the property which was foreclosed was your primary home.

Here is a link to the law;

http://turbotax.intuit.com/tax-tools...ship/5512.html