topic Re: 1099 for Charged Off Debt in Bankruptcy

1099 for Charged Off Debt

Rw1016 — Sat, 28 Dec 2019 20:32:25 GMT

Hey everybody, I'm honestly not sure where to post this and as I'm near filing a chapter 13 case, I figured I'd just post this in here and hope that someone can help me out.

Essentially, my question is, do credit card companies or personal loan companies issue a 1099 for charged off debt? I know you're supposed to get a 1099 for any debt that is forgiven, settled or cancelled in excess of $600.00. So I am wondering is a charge off the same as "cancelled" debt? None of my debt have been forgiven or settled, so I'm a bit confused because if a charge off does mean cancelled, then one would think you're not responsible for the debt but I know that can't be possibly true. In my case, I have several charge offs but they're still trying to be collected on by either the original cc companies or collection agencies. Any advice would truly be appreciated! Thank you in advance!

Re: 1099 for Charged Off Debt

Shooting-For-800 — Sat, 28 Dec 2019 20:48:53 GMT

Insolventancy cancels the effects of 1099s.

Re: 1099 for Charged Off Debt

Rw1016 — Sat, 28 Dec 2019 20:56:27 GMT

Right and unfortunately, my wife and I are very much insolvent. We don't own a house or a car (it's a lease). We don't own a business. We rent an apartment. No real assets to speak of as sad as that is.

Re: 1099 for Charged Off Debt

recoveringfrombk7 — Sat, 28 Dec 2019 20:59:16 GMT

It's not sad. It's normal for a lot of folks. Better a roof over your head and a car than nothing at all.

Re: 1099 for Charged Off Debt

Shooting-For-800 — Sun, 29 Dec 2019 18:01:50 GMT

Median Household income in America = $63k

Median Household net worth in America (under 35 years old) = $11k

Median Household net worth in America (35-44 years old) = $60k

40 million Americans are in poverty (household income under $25k with 2 kids)

20 million of those are in deep poverty (household income under $13k with 2 kids)

Plenty of time to turn your finances around.

Learn from your mistakes and prosper from the education.

One good promotion, IRA, or home purchase can change everything when handled correctly.

GL and Hang in There!

Re: 1099 for Charged Off Debt

Rw1016 — Sat, 28 Dec 2019 21:33:41 GMT

This is absolutely true - great way to look at things. Thank you so much!

Re: 1099 for Charged Off Debt

FireMedic1 — Sat, 28 Dec 2019 23:34:02 GMT

In filing your 1040 with the IRS, you will need to attach a Form 982 to your federal income tax return. By filling out Form 982 for the IRS, you will be letting them know that you are not adding the canceled debt to your gross income on your tax return and that the debt is excluded from your income due to the filing of a bankruptcy.

Re: 1099 for Charged Off Debt

Rw1016 — Sun, 29 Dec 2019 04:08:25 GMT

Thanks FireMedic1. Do I have to attach this form even if I don't get any 1099's? Do you have any knowledge or information relating to my original question? I was wondering if charged off debt is essentially treated as cancelled debt as the IRS terminology indicates that ant cancelled, discharged or settled debt in excess of $600 is treated as income. In my case, the debt isn't settled or discharged so I wasn't sure if it's considered cancelled debt by the creditor. Tyia!

Re: 1099 for Charged Off Debt

FireMedic1 — Sun, 29 Dec 2019 09:21:55 GMT

You only have to worry about it if you get a notice from the creditor. Not all creditors send out notices. Good Luck on your BK journey.