Anybody have experience with unsecured Debt Relief

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Q. Does anyone have info on recent developments regarding the tax liability on forgiven debt? Last I heard, somebody was working on a change in legislation in Congress. Did anything ever happen? Got a call yesterday from an owner who currently has his condo listed at 140K, subject to a short sale. According to the public record he paid 172K in 6/91. He now owes 151K. As he lives in the condo and he can't write of the loss on the personal residence, it looks to me like he'd have at least 11K taxable debt relief even if Glendale Fed, the lender, pays all commissions and sales expenses (owner says they will.) According to the owner it's been listed for 3 weeks with no showings, so the sales price will probably be less. Is it common for lenders to pay the commissions? How do they figure the loss on the 1099? Will they add the sales expenses to the 11K and send a 20K 1099? What would be the tax consequences of a foreclosure compared to the short sale? Glendale states in their "Prenegotiation Agreement" that they will report the loan on the credit as "SETTLED." How will that impact on his ability to get a home or any other loan in the future? Same as foreclosure? Anybody have experience with Ch. 20? First the Ch. 7 to discharge unsecured debt, then a Ch. 13 for the mortgage. The owner now has a 9.25% adj. rate. It looks like he's just over extended himself and charged up the credit cards because he took a $300 pay cut in addition to the increasing ARM payments. The owner states that he has never been late on any payment, has "5 star credit." He had applied to refi with a lower rate, but Glendale declined due to insufficient income and excessive obligations. The payments are now $1,215, owner says he could make a $1,000 monthly payment, but Glendale won't deal. They'd rather do the short sale and lose about 20K than modifying to maybe interest only and give the guy a break for a year. The market conditions are poor right now, to say the least. Sorry about this long post on a difficult subject, but maybe somebody out there is willing to share some info.

A. When Glendale finally does get some payment, can they still slap a deficiency judgment for the shortfall on the seller's credit report? Or have they explicitly agreed not to do so? A deficiency judgment would certainly impact his ability to borrow in the future.

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