CITI....disputed reporting with CRA then CFPB...still this:

[austinrb1]

How do I proceed?  My dispute was the balance (showing 6k) and payment due (showing 6k) were not properly reported, and should be $0 and $0 after the 1099c

Citi said:
Explanation of closure

  

October 21, 2014



Re:  Consumer Financial Protection Bureau (CFPB) #00

Dear Mr.:  

We have received your inquiry that was submitted to the CFPB regarding your Citi(R) Diamond Preferred(R) MasterCard(R) account ending in 6874.  This account is issued and serviced by Citibank, N.A.  

Our records indicate that we received your last payment on December 28, 2009.  Citi is required by federal banking laws to charge off account balances that remain unpaid after a certain period of delinquency.  Your account charged off as a bad debt on January 20, 2010.  

Whenever $600.00 or more in principal amount of a debt is discharged, we are required to report the amount of debt discharged to the Internal Revenue Service (IRS) on a Form 1099-C.  

The issuance of a Form 1099-C does not change the payment history of the account.  We are unable to change the information submitted to the major credit-reporting agencies, as it accurately reflects your payment history.  Under the Fair Credit Reporting Act, we are obligated to report payment history based on factual account data.  Standards established in the credit industry ensure integrity of data and uniform communication between the credit-reporting agencies.

Sincerely, 

 

B. Linde	
Regulatory Complaint Specialist 
Citibank, N.A. 
4600 Houston Road
Florence, KY 41042

cc:  CFPB	

[yfan]

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@austinrb1 wrote:

How do I proceed?  My dispute was the balance (showing 6k) and payment due (showing 6k) were not properly reported, and should be $0 and $0 after the 1099c

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No, it shouldn't. Not unless you paid it off. Citi has to report it on a 1099c because that is how they get a tax break for the bad debt. But YOU still owe the debt. Nothing whatsoever changes for you.

[austinrb1]

Interesting you say that.  Why is it there is much advisement here that states otherwise? 

Edit:  meaning, I acknowledge the debt, but they 'wrote it off' once they filed the 1099c.  The charge off  is NOT a write off; a simple balance sheet adjust is all.

[dursty87]

Interesting. I was under the assumption that once a 1099 c was issued the debt was forgiven/excused and thus the trade line had to be updated to reflect a 0 balance just  as if it was sold. Big difference between a charge off and 1099. Maybe Robert will stop by and shed some light. 

[Anonymous]

I just had this same situation with GM financial with a auto repo from 2008 showing over 17,000 past due. GM issued a 1099 C in 2012 yet refused to change the balance to zero when I disputed with the credit bureaus. I then disputed GM Financial and all 3 Bureau's with the CFPB and the reporting was changed to a zero balance yesterday. 

[RobertEG]

A charge off is NOT synonymous with cancellation of the debt.

Debt remains fully due after a CO.  It does not if it is cancelled.

They are NOT required to report cancellation of debt to the IRS via a form 1099c in order to charge the bad debt to profit and loss.

They can choose to issue an amended 1099c if they feel that they erroneously cancelled the debt.

Until they do so, you cannot be forced to pay taxes on cancelled debt as income to you, and yet still have a remaining debt.

[dursty87]

Robert, what if taxes have been paid on the debt due to a 1099c. Would the debt then be forgiven ? Would it have to report a 0 balance ?