06-12-2013 03:29 PM
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!
06-12-2013 03:32 PM
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.
06-12-2013 04:02 PM
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?
06-12-2013 04:07 PM
I agree, it should be a $0 balance. They can't deduct it from their taxes and collect. That's double dipping.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.