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Contributor
specialksauce
Posts: 103
Registered: ‎06-07-2013
0

Charge off showing balance and still reporting to CRA's every month

USAA charged off a credit card (2 actually) 

 

#1 - Date closed was 5/6/2008....last payment made was 03/20/2009 but payment received was $0. He has received a 1099-C for 2012 for the entire charge off amount. Item will be removed 12/2014 from CRA's.

 

#2 - Date closed was 6/24/2008...last payment made was 3/20/2009 but payment received was $0. He has received a 1099-C for 2012 for the entire charge off amount.  Item will be removed 02/2015 from CRA's. 

 

Obviously they still own the debt and claim it as a loss. But I thought charge offs had to report $0 balances? Or can they report the balance owed if they don't sell it off?

 

They are updating the CRA's every month saying they aren't being paid but have written it off in their books. 

 

What is the best way to remedy this mess? He can't pay these large amounts....

 

Any thoughts or help would be greatly appreciated! 

Moderator
guiness56
Posts: 22,408
Registered: ‎01-17-2008
0

Re: Charge off showing balance and still reporting to CRA's every month

The OC can report a balance if they still own the debt.  And because a debt was charged off does not mean it isn't still owed.  A charge off is just an accounting term.

 

However, if they sent a 1099-C and you have claimed that on your taxes they must report a 0 balance.  They cannot collect on a forgiven debt.

Contributor
specialksauce
Posts: 103
Registered: ‎06-07-2013
0

Re: Charge off showing balance and still reporting to CRA's every month

He didn't claim it on his taxes this past year. I know he can claim insolvency though because his debts (foreclosure and charge offs) outweigh his assets. 

 

If they waive the taxes owed on the 1099-C, they USAA has to reflect a $0 balance correct?

Moderator
guiness56
Posts: 22,408
Registered: ‎01-17-2008
0

Re: Charge off showing balance and still reporting to CRA's every month

Moderator
Shogun
Posts: 12,952
Registered: ‎04-15-2011
0

Re: Charge off showing balance and still reporting to CRA's every month

I agree, it should be a $0 balance.  They can't deduct it from their taxes and collect.  That's double dipping.


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