Shortsale Deficiency in BK

[Kathryn K.]

My neighbors are going through bankruptcy, I think its chapter 13. They have a couple of rental properties that are included in the bankruptcy. They are upside down and will result in an eventual shortsale. What happens to the deficiency? Will they get a 1099 or will there be a deficiency judgment that gets thrown in with the rest of their debt to pay off? They are under the impression that there will be no financial consequences regarding the rental properties.