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.