topic Re: Charged off accts, now 1099-C please help!! in Rebuilding Your Credit

Charged off accts, now 1099-C please help!!

Anonymous — Fri, 24 Jan 2014 05:20:21 GMT

HI, in Nov 2012 two of my cards with large balnaces were charged off... BofA and Chase. Summer 2013 my Discover was charged off with a smaller balance.

All have had me with at least 3 coll. agencies. I have no $ to pay, in the middle of divorce etc etc.

Just received a letter from Chase that they were sending me a 1099-C, but were still going to tell the credit bureaus that I owed a balance. Is this right? If I have to claim on my taxes isn't the amount due cancelled? Can I dispute the credit report? etc.....

Also, any suggestions on how to settle with the remaining accts to avoid a BK?

Thank you.

Re: Charged off accts, now 1099-C please help!!

Anonymous — Fri, 24 Jan 2014 05:21:28 GMT

Forgot to say, if it matters, that I am in California.

Re: Charged off accts, now 1099-C please help!!

Anonymous — Fri, 24 Jan 2014 16:26:57 GMT

If you get a 1099-C, no, they cannot report a balance on your CR, it must be 0. A 1099-C is forgiven debt. If you don't owe, they can't report you do.

Re: Charged off accts, now 1099-C please help!!

Anonymous — Fri, 24 Jan 2014 22:15:08 GMT

Thank you.... concerned that the letter they sent me says they are still reporting the acct to credit bureaus.... how can I stop that?

Re: Charged off accts, now 1099-C please help!!

Anonymous — Fri, 24 Jan 2014 22:21:14 GMT

All they will do is report your balance as $0 at the CRA's The charge off stays on your records for up to seven years. For 1099-C see if you can qualify for insolvent status when you file your taxes. BTW, if the 1099-C was for this year then you can wait till next year to take care of it.

Re: Charged off accts, now 1099-C please help!!

Shogun — Fri, 24 Jan 2014 22:50:35 GMT

Actually, this has been put to trial before and as strange as it sounds to me, they do not have to $0 the balance out.

The Motion

It is inequitable to require a debtor to claim cancellation of debt income as a component of his or her gross income and subsequently pay taxes on it while still allowing the creditor, who has reported to the Internal Revenue Service and the debtor that the indebtedness was cancelled or discharged, to then collect it from the debtor. ……

The Ruling

The court does not agree with the argument that because a Form 1099-C can be corrected or amended, it cannot constitute an admission by a creditor that a debt has, in fact, been discharged or cancelled and that the debtor is no longer indebted thereon.

This is a ruling on one such occassion of this. But it's not a cut and dry type of thing. Some states consider it closed, others do not. I would seriously consult an attorney in your area that is knowledgeable in this.

Re: Charged off accts, now 1099-C please help!!

Anonymous — Sat, 25 Jan 2014 00:02:25 GMT

The purpose of a 1099-C is forgiven/cancelled debt so that ruling is a bit confusing.

Re: Charged off accts, now 1099-C please help!!

Shogun — Sat, 25 Jan 2014 00:07:42 GMT

@Anonymous wrote:
The purpose of a 1099-C is forgiven/cancelled debt so that ruling is a bit confusing.

I agree totally guiness, but when I did some research on this awhile back, I found several of these types of rulings. I'm not exactly sure of what to make of it myself.

Re: Charged off accts, now 1099-C please help!!

Anonymous — Sat, 25 Jan 2014 02:39:46 GMT

Well if the 1099C does truely erase, I will be ok, but if I can still be sued then I will have to file BK as I have other cc's knocking. Was trying to settle the others..... The 1099C dosen't bother me as far as taxes go, as I am in poverty now.

Re: Charged off accts, now 1099-C please help!!

Shogun — Sat, 25 Jan 2014 03:02:28 GMT

@Anonymous wrote:
Well if the 1099C does truely erase, I will be ok, but if I can still be sued then I will have to file BK as I have other cc's knocking. Was trying to settle the others..... The 1099C dosen't bother me as far as taxes go, as I am in poverty now.

I wouldn't say for 100% certainty, because I just can't. But I'd bet that after you receive that 1099C, you probably won't hear anything else about it.

Re: Charged off accts, now 1099-C please help!!

Anonymous — Sat, 25 Jan 2014 03:08:16 GMT

Do I then write a letter to dispute the account on the credit reports or does that stay on there?

Re: Charged off accts, now 1099-C please help!!

Shogun — Sat, 25 Jan 2014 03:28:36 GMT

@Anonymous wrote:
Do I then write a letter to dispute the account on the credit reports or does that stay on there?

Franky... I don't the answer to this, so I'll admit to that. My personal opinion is that if I received a 1099C, I would assume that the balance would be $0. I know that we're not supposed to dispute correct information, but I just don't think it's correct. Kind of a grey area.

Re: Charged off accts, now 1099-C please help!!

Anonymous — Sat, 25 Jan 2014 17:44:41 GMT

For the life of me I cannot find it now but I ran across a regulation on how a creditor was supposed to report a CO and a 1099-C on your CR. It specifically stated if a 1099-C was issued it had to report 0 and was illegal for them to try and collect.

It was by accident I ran across it and now I am hoping to find it again. It was from an official government site so I will keep looking. Never thought to bookmark the page.

Re: Charged off accts, now 1099-C please help!!

Shogun — Sun, 26 Jan 2014 02:31:37 GMT

I hope you find it because I'd like to bookmark it too. It's a bit out of the realm of what I'm positive about.

Re: Charged off accts, now 1099-C please help!!

Anonymous — Sun, 26 Jan 2014 03:04:20 GMT

This one is for federal debts:

31 CFR § 903.5 Discharge of indebtedness; reporting requirements.

(a) Before discharging a delinquent debt (also referred to as a close out of the debt), agencies shall take all appropriate steps to collect the debt in accordance with 31 U.S.C. 3711(g), including, as applicable, administrative offset, tax refund offset, Federal salary offset, referral to Treasury, Treasury-designated debt collection centers or private collection contractors, credit bureau reporting, wage garnishment, litigation, and foreclosure. Discharge of indebtedness is distinct from termination or suspension of collection activity under part 903 of this title and is governed by the Internal Revenue Code. When collection action on a debt is suspended or terminated, the debt remains delinquent and further collection action may be pursued at a later date in accordance with the standards set forth in this chapter. When an agency discharges a debt in full or in part, further collection action is prohibited. Therefore, agencies should make the determination that collection action is no longer warranted before discharging a debt. Before discharging a debt, agencies must terminate debt collection action.

(b) Section 3711(i), title 31, United States Code, requires agencies to sell a delinquent nontax debt upon termination of collection action if the Secretary determines such a sale is in the best interests of the United States. Since the discharge of a debt precludes any further collection action (including the sale of a delinquent debt), agencies may not discharge a debt until the requirements of 31 U.S.C. 3711(i) have been met.

(c) Upon discharge of an indebtedness, agencies must report the discharge to the IRS in accordance with the requirements of 26 U.S.C. 6050P and 26 CFR 1.6050P–1. An agency may request Treasury or Treasury-designated debt collection centers to file such a discharge report to the IRS on the agency’s behalf.

(d) When discharging a debt, agencies must request that litigation counsel release any liens of record securing the debt.

I'll keep looking for non-government debts.

Re: Charged off accts, now 1099-C please help!!

Anonymous — Thu, 30 Jan 2014 04:05:39 GMT

OK so I got the official 1099-c and they have marked the identifiable event code as G.... does that mean I still owe them even if I have to claim as income?

Re: Charged off accts, now 1099-C please help!!

Anonymous — Thu, 30 Jan 2014 15:05:39 GMT

I had a BOA credit card and they issued a 1099-C but still reported the balance with the credit agencies. BOA would not change it so I filed disputes with the credit agencies....

Experian changed the balance

Equifax said no change

Transunion...no results yet.

I then filed a complaint with the CFPB but no results yet.

Re: Charged off accts, now 1099-C please help!!

Anonymous — Thu, 30 Jan 2014 15:59:35 GMT

@Anonymous wrote:
OK so I got the official 1099-c and they have marked the identifiable event code as G.... does that mean I still owe them even if I have to claim as income?

G—Decision or policy to discontinue collection;

Sounds to me that you do not.

Re: Charged off accts, now 1099-C please help!!

titanofold — Thu, 30 Jan 2014 16:10:09 GMT

@Anonymous wrote:
@Anonymous wrote:
OK so I got the official 1099-c and they have marked the identifiable event code as G.... does that mean I still owe them even if I have to claim as income?
G—Decision or policy to discontinue collection;

Sounds to me that you do not.

Yes, you owe them. No, they're not going to forward it along to a CA or sue you for it.

They've deemed you a lost cause and/or believe that it'd be a loss to recoup the money.

So, yes, you owe them, even though you get to claim it as income.

You can still pay them and they would have to file a correction to the 1099-C updating the 1099-C to $0, which means you get to update your taxes for that year you claimed it.

That's why the court says that the balance can still be reported to the CBs even though a 1099-C has been filed.

IANAL. IANAJ either.

Re: Charged off accts, now 1099-C please help!!

Anonymous — Thu, 30 Jan 2014 16:15:24 GMT

@titanofold wrote:
@Anonymous wrote:
@Anonymous wrote:
OK so I got the official 1099-c and they have marked the identifiable event code as G.... does that mean I still owe them even if I have to claim as income?
G—Decision or policy to discontinue collection;

Sounds to me that you do not.
Yes, you owe them. No, they're not going to forward it along to a CA or sue you for it.

They've deemed you a lost cause and/or believe that it'd be a loss to recoup the money.

So, yes, you owe them, even though you get to claim it as income.

You can still pay them and they would have to file a correction to the 1099-C updating the 1099-C to $0, which means you get to update your taxes for that year you claimed it.

That's why the court says that the balance can still be reported to the CBs even though a 1099-C has been filed.

IANAL. IANAJ either.

Different courts find differently. One may say you owe, another may say no.

This is one of the most poorly written items there is.