Can my 1099-C Come After My Husband's Money?

[katieperry1979]

What is the name of your state (only U.S. law)? Pennsylvania
When I was single I defauled on a debt. I've been married for four years. I'm a SAHM so I have on income.
If I get a 1099 on my old debt, can I file for insolvency? Does the IRS take my husband's income and decide? I was under the impression that you don't marry the debt.

 

[LdiJ]

What is the name of your state (only U.S. law)? Pennsylvania
When I was single I defauled on a debt. I've been married for four years. I'm a SAHM so I have on income.
If I get a 1099 on my old debt, can I file for insolvency? Does the IRS take my husband's income and decide? I was under the impression that you don't marry the debt.

The problem is that cancelled debt becomes taxable income unless you have a valid exclusion. If you have the necessary documentation to prove that you were insolvent at the time that the debt was cancelled, that would be a valid exclusion. However, it doesn't appear that your husband is insolvent.

However, one way or another its going to effect your husband, because you would both have to file married filing separate returns to ensure that he wouldn't be responsible to pay taxes on that debt. That is going to cause HIS taxes to be higher than they would be filing joint.

How much debt are we talking about?