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6 year old 1099'ed, charged off account still reporting late!

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nycfico
Regular Contributor

6 year old 1099'ed, charged off account still reporting late!

Ugh this is so frustrating.

 

I had an account with JPMC which at one point I had a $30,000 balance on.  It charged off.  It is expected to fall off in September of 2016.  Even after it was charged off, I kept making payments towards it for a couple of years and the balance came down to about $20,000.  Suddenly I received a 1099 from them saying they were walking away, essentially, from the debt and no more collections.  I wanted to keep on the payment plan, but the 1099 triggered a tax issue that I needed to turn my attention to.  I was annoyed, frankly, that I had worked so hard to pay it off, little by little, and had gotten 1/3 of the way through it and then owed taxes.  But whatever, that was my fault.

 

But now it is STILL showing a $20,000 balance and continues to report as late.  It's killing my score.  How can a charged off account that was 1099'ed still be reporting both?  Seems completely unfair as they were the ones to walk, they put me in a tax issue and it was charged off many years back.

 

What to do...anybody with any ideas?

Message 1 of 4
3 REPLIES 3
cashnocredit
Valued Contributor

Re: 6 year old 1099'ed, charged off account still reporting late!


@nycfico wrote:

Ugh this is so frustrating.

 

I had an account with JPMC which at one point I had a $30,000 balance on.  It charged off.  It is expected to fall off in September of 2016.  Even after it was charged off, I kept making payments towards it for a couple of years and the balance came down to about $20,000.  Suddenly I received a 1099 from them saying they were walking away, essentially, from the debt and no more collections.  I wanted to keep on the payment plan, but the 1099 triggered a tax issue that I needed to turn my attention to.  I was annoyed, frankly, that I had worked so hard to pay it off, little by little, and had gotten 1/3 of the way through it and then owed taxes.  But whatever, that was my fault.

 

But now it is STILL showing a $20,000 balance and continues to report as late.  It's killing my score.  How can a charged off account that was 1099'ed still be reporting both?  Seems completely unfair as they were the ones to walk, they put me in a tax issue and it was charged off many years back.

 

What to do...anybody with any ideas?


Yes, unless the 1099 indicates the debt was forgiven and no longer owed.. Very few do. Most are filed becuase of IRS regulations re collection efforts or that the OC has decided to discontinue collection.  That doesn't eliminate the obligation. The 1099 include a code that indicates the reason the 1099 was required.


I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy18k, Amex Plat (60k H/B), Citi AA EWMC 25k
Message 2 of 4
RobertEG
Legendary Contributor

Re: 6 year old 1099'ed, charged off account still reporting late!

You will find literally hundreds of articles and opinions on whether the sending of a 1099c requires update of debt balance owed to $0.

Yes, there are some interpretations of the tax code that sending of a 1099c does not cancel the debt, even though that is its title and statement.

However, the preponderance of opinion is that it does require update of the debt balance to $0.

 

I would NOT accept the interpretation that their sending of a 1099c does not mandate update of the debt balance to $0.

I would dispute, and if they verify the accuracy, send a formal complaint to the CFPB.

 

Additionally, if you have not done so, contact a tax professional before paying the asserted tax.

A 1099c has exemption provisions, and does not automatically impose a tax obligation.  A notable exemption is if you can show that you were insolvent at the time of cancellation, whiich involves showing IRS that your debt were more than your assets.

Message 3 of 4
wa3more
Established Contributor

Re: 6 year old 1099'ed, charged off account still reporting late!

send a copy of the 1099 to the credit bureaus. They will zero out balance. That is what I did

Message 4 of 4
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