Stop paying mortgage, will bank go after income?

[lonewahya]

Originally Posted by I'm Retired Now

So they will give her a huge tax bill in a short sale and/or send bill collectors after her for the difference between the mortgage and the value of the house?

Not necessarily. If it is sent to a collection agency, they "own" the debt and will do what it is that they do. Including possible wage/bank account garnishment. If the collection agency gets the bill, there will not be a 1099 sent.

A 1099 is one year tax hit and then it is over. A collection agency can keep things going for longer than that. Either way, the credit report hit is bad. One could argue one is worse, but at that point,...

[svehla]

I received a 1099 on an automobile of my ex husband and my tax return was hit for $8000. As a single mom of two, my return was approximately $8700. Big loss for me!!! So I was left with $700. That hurt and my credit was ruined!! Don't know about the mortgage question but I think it could haunt her for years.