@Pilotdude wrote:
@guiness56 wrote:The creditor reports any forgiven debt $600 or more on a 1099-C. One is sent to the IRS, one to the consumer. The consumer must include the amount on the 1099-C as income for the year they received it.
Once a 1099-C is issued, the CA or OC can no longer attempt to collect on the debt.
Thats correct but let me take it a step further:
A 1099-C is exactly what Guiness56 states, however you must report the monies as income on your taxes. Failure to do so may lead to the IRS mitigating it for you. (Changing your tax refund amounts to compensate for it and for any penalties which apply for filing and not reporting all income)
However, it is common practice for creditors to hold these forms until February despite the fact that they date them for back in December of the preceding year. So a LOT of people receive their 1099-C AFTER they may have already filed their taxes for the year.
If this is the case you have a couple choices to fix it:
1. Do nothing and hope the IRS doesn't slap you with a penalty.
2. File a 1040-X amended return and claim the amount as income. (Often you have 3 years to do this in btw)
Keep the envelope your 1099-C arrived in if it arrived recently with a back date on the form itself. That way if you have to explain anything you can show you received it after you already filed.
As far as collecting on it goes, yes after the 1099-c is filed by the creditor any attempt to collect on it by the creditor or his agents or designees is a violating of Consumer protection laws. (No matter what the Collection agency claims)
Keep that form in your files somewhere becuase if a Collection agency reports it to a credit bureau you can use it to insta delete the entry.
Hope that helps
This is what I was trying to figure out too. So, if the OC already sent this AND the tax issue was taken care of; shouldn't the reported balance be changed to zero? I know the CO is accurate, but there isn't a balance any longer.
@maluba is this item on your report with a balance?
@guiness56 wrote:It does not have to be deleted. It is showing a 0 balance and the TL was reporting before the 1099-C was issued. By reporting 0 there is no collection activity.
I appreciate all of your responses, as you are very knowledgeable. Looks like you answered my question earlier. I was trying to include the OP so I didn't take over his/her thread. My situation was that I did get the 1099 and dealt with the tax situation already this year. The CO though still reports a balance on all 3 CRAs. The balance was my curiosity, not the CO itself.
Edited to say this is in response to Guinness, I messed up the reply/quote thing:
Hi there - OC is reporting a balance to all 3 CRBS. Do I just dispute, and include a copy of the 1099-C?
What does your second sentence mean? I did get the 1099-C but no CA reported.
Thanks
OK, thanks guiness!
I'm gonna try to recify it by disputing with the bureaus and the OC. Remind OC that it cancelled the outstanding balance, per Form 1099-C, so continuing to report an outstanding balance to the bureaus is inaccurate. I'll post here if they actually respond.
@guiness56 wrote:I wouldn't dispute with the CRAs but with the OC.
I figured out how to quote. aha!
I don't know, I saw stuff like
that all kind of seemed to say you lose the right to sue credit bureaus under FCRA/CCRA for failure to correct inaccurate info, if you don't dispute with the bureaus as well as with the OC.
I'm anticipating maybe wrongly but I'm thinking this will be difficult, they won't cooperate, and I'll have to take further action to get them to comply, so I want to keep my options, like suing, even if it's a long shot, open. Hence the letters to the bureaus.