Insolvency question

We did a short-refi on our home last year. It does not happen very often but we were able to refinance our home with a new lender and the old lender wrote off $70,000 of our loan. We now have to prove insolvency and we are having trouble with the worksheet. On the worksheet we list the $127,000 loan that we had as a liability on the top of the sheet. Then we have to list our assets and our accountant says we have to put the value of our home at the time. We had an appraisal at the time which said the house was worth $70,000 but we got a new $65,000 mortgage on it when we did the short-refi. To me, our home is not a $70,000 asset . . . it is a $5,000 asset; as that is what we would be left with if we sold it. I have looked online and I can't find anyone with this situation. I think this form works well for people that have done a short sale or forclosure but we don't seem to fit the mold? Any opinions?

Your is typically a question for a professional. IMO your best bet is to consult an attorney about this.

Meanwhile, UncleWulf has expertise in dealing with tax issues. Most likely he would stop by. So, just hang tight.

Om the one hand, you view the house as a $5,000 asset. On the other hand, it's your house...

I think you need to do one of two things. Either:

- Get a better accountant, or

- Spend $100 for some time with a competent tax attorney.

Personally, I suggest both.