A veteran passes away owing a debt to the VA on a house.  The note was not in default or late prior to his death.  There were not enough assets left in the Estate to pay the note (upside down on the house note.)  The house was repossessed and the VA paid the bank the guaranteed part of the note.  Is there cancellation of debt since the VA will never get the money they paid on the note.  The note was completely paid off by the VA so there is not cancellation of debt from the Bank's point of view.  Does the Estate then owe the VA and since the VA will never get paid is there cancellation of debt from the VA's side?