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HI All,
I have been getting conflicting information regarding 1099C.Here is what I learned so far. Can someone confirm if it correct or incorrect:
1) 1099C are issued as a result of a forgiven debt. Most 1099C are a result of BK or a settled debt for less the the original amount owed. 1099C have been issued for uncollectible debts. The forgiven debt is considered income.
2) Once a 1099C is issued your credit reports should reflect a zero balance owed.
3) The debt can not be collected or sold.
Clarifing Questions:
1) If the OC sold the debt to a JDB, who has the right to issue a 1099C? The OC probably sold the debt for pennies on the dollar so wouldnt they be able to issue a 1099C for their loss?
2)If the JDB settled on a debt for less then the original debt amount, do they get to issue a 1099C even though they bought the debt for pennies on the dollar?
@sjt wrote:HI All,
I have been getting conflicting information regarding 1099C.Here is what I learned so far. Can someone confirm if it correct or incorrect:
1) 1099C are issued as a result of a forgiven debt. Most 1099C are a result of BK or a settled debt for less the the original amount owed. 1099C have been issued for uncollectible debts. The forgiven debt is considered income.
2) Once a 1099C is issued your credit reports should reflect a zero balance owed.
3) The debt can not be collected or sold.
Clarifing Questions:
1) If the OC sold the debt to a JDB, who has the right to issue a 1099C? The OC probably sold the debt for pennies on the dollar so wouldnt they be able to issue a 1099C for their loss? Once the OC charges off the debt they recoupe some off it at tax time. The CA would issue the 1099C as they own the account now.
2)If the JDB settled on a debt for less then the original debt amount, do they get to issue a 1099C even though they bought the debt for pennies on the dollar? No, settled is settled. They can not issue a 1099 or sell it to another CA.
If you filed Chapter 7 BK there is no more debt as it is completely wiped from existence, so no 1099C can be issued.
@sjt wrote:HI All,
I have been getting conflicting information regarding 1099C.Here is what I learned so far. Can someone confirm if it correct or incorrect:
1) 1099C are issued as a result of a forgiven debt. Most 1099C are a result of BK or a settled debt for less the the original amount owed. 1099C have been issued for uncollectible debts. The forgiven debt is considered income.
2) Once a 1099C is issued your credit reports should reflect a zero balance owed.
3) The debt can not be collected or sold.
Clarifing Questions:
1) If the OC sold the debt to a JDB, who has the right to issue a 1099C? The OC probably sold the debt for pennies on the dollar so wouldnt they be able to issue a 1099C for their loss? No they no longer hold any interest in the debt and would not isssue a 1099. If they did they could be in big trouble.
2)If the JDB settled on a debt for less then the original debt amount, do they get to issue a 1099C even though they bought the debt for pennies on the dollar? Yes, they can issue a 1099. When you settle a debt and the remainder is $600 or more they have to issue one.
@guiness56 wrote:
@sjt wrote:HI All,
I have been getting conflicting information regarding 1099C.Here is what I learned so far. Can someone confirm if it correct or incorrect:
1) 1099C are issued as a result of a forgiven debt. Most 1099C are a result of BK or a settled debt for less the the original amount owed. 1099C have been issued for uncollectible debts. The forgiven debt is considered income.
2) Once a 1099C is issued your credit reports should reflect a zero balance owed.
3) The debt can not be collected or sold.
Clarifing Questions:
1) If the OC sold the debt to a JDB, who has the right to issue a 1099C? The OC probably sold the debt for pennies on the dollar so wouldnt they be able to issue a 1099C for their loss? No they no longer hold any interest in the debt and would not isssue a 1099. If they did they could be in big trouble.
2)If the JDB settled on a debt for less then the original debt amount, do they get to issue a 1099C even though they bought the debt for pennies on the dollar? Yes, they can issue a 1099. When you settle a debt and the remainder is $600 or more they have to issue one. You are correct on this. I should know better as I just filled out a 1099 for a lawsuit I just won against a JDB.
Thanks all for the information and clarification.
Where is written clarification from a legal or case law that says a zero balance should be shown on a 1099-C. I have a Bank of America account the was charged off, then 1099-C'd in full and they are still reporting the balance 3 years later as I've been trying to get this balance to 0 for over 6 months now I need some help if you can please....
BA issued a 1099-C to a friend of mine a few years back. For the WRONG amount. Saying that they wrote off much more than they did. Never got it fixed. BA wouldn't budge.
But BA (I think through all of the hoopla and complaints filed with how they were handling the situation) did update the balance to zero.
They may need a stern reminder that they need to correct their mistake. They can't have it both ways (and tell them this) that they claim they wrote the debt off as evidenced by the 1099-C yet still say you owe them money.
Let us know what happens.
You wont find a specific statement in the law other than the fact that a cancelled debt = no more debt.
When the accuracy of any information that has been reported to a CRA changes, as in this case, FCRA 612(a)(2) imposes a requirement on the furnisher to promptly update their reporting so as to reflect its current accuracy.
Send them a direct dispute to the OC if they are still reporting a balance due on a cancelled debt, and/pr to any debt collector who is reporting a balance still under their collection.
If they verify, then file a formal complaint with the CFPB for their violation of FCRA 623(a)(2), and also challenging their improper verification of a non-existent debt.
I also got a 1099 from BofA. They are still showing I owe money via Chexsystems so I sent Chexsystems a letter with a copy of the form requesting they change the information. I received a generic letting stating the 30 days and would look into it. I have about 3 more weeks to find out the result. It should be PAID & $0 balance.