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I had a loan with USAA for the amount of 1986.00 it was charged off, never sent to collections, I then received a 1099-C in the mail and then a letter from the IRS telling me I owed them some money.
I sent in the amount of money to the IRS, and yet USAA is still reporting this account with balance on all 3 credit reports.
Any Ideas if it can be removed or not..
If they have sent the 1099-C then there is no balance they can attempt to collect. If it has little time to report left I would leave it alone. If its reporting monthly and has lots of time then I would challenge the balance.
Agreed, there was some argument a few years ago where they said they could still list it because the 1099-C could be adjusted. But this didn't hold up to well. If you've paid taxes on it. It's done.
The law is actually somewhat unsettled on this. There are conflicting cases, but Reed case seems to be the strongest and supports the consumers side. Some creditors argue that the 1099-C is simply an administrative thing, and that it does not 'in itself' discharge the debt, and the IRS actually agrees. I would contact USAA and ask that the balance be zeroed out if they have no intention of *ever* pursuing the debt. If they refuse, then make SURE you keep a record of the 1099-C just in case USAA comes after the balance later, you would be entitled to a refund of those taxes paid.
I totally concur with Norman.
Additionally, you might wish to file a complaint with the CFPB over their failure to have promptly updated the debt balance to $0, as required under FCRA 623(a)(2).
That might result in the CFPB weighing-in on their interpretation of cancelleation of debt.
As your report now stansds, it is indicating that you still owe debt, while in fact your payment of taxes on the amount as income is based on the interpretation that the amount is no longer debt once it is cancelled.