topic Re: 1099-C paid but balance remains...UPDATE in Rebuilding Your Credit

1099-C paid but balance remains...UPDATE

Jamgal40 — Thu, 31 Mar 2016 21:29:20 GMT

I disputed the acount with all three CRAs:

Experian: deleted the tradeline

Transunion: Updated to zero balance

Equifax: Still have not heard back from them.

I received a 1099-C for tax year 2014 with the event code 'H'. I've paid the taxes on it but the OC is still reporting reporting a balance and this has the utilization for this particular account at 117%. Can they still report a balance or should the balance be $0 since I've already paid taxes on it? If the balance is incorrect and should be zero how do I go about getting it changed so that the OC reports a zero balance. The OC is First National Credit Card, Legacy Visa, and they still own the debt.

Re: 1099-C paid but balance remains

Anonymous — Tue, 08 Mar 2016 01:10:46 GMT

I'm pretty sure that if u haven't paid the actual charge off then it will still report on your credit file. Someone please correct me if I'm wrong.

Re: 1099-C paid but balance remains

lindsaydruart — Tue, 08 Mar 2016 01:22:56 GMT

A 1099-C doesn't wipe out the debt. It's just a way for the company to get a tax credit on your debt. You still owe.

Re: 1099-C paid but balance remains

Jamgal40 — Tue, 08 Mar 2016 01:28:25 GMT

Thank you both. I read somewhere on here that some people have had luck with the OC updating to show zero balance. I'm not going to mess with it though.

Re: 1099-C paid but balance remains

RobertEG — Tue, 08 Mar 2016 01:58:19 GMT

In general, the sending of a 1099c is considered as cancellation of the debt and the balance should be updated to $0.

While a charge-off does not cancel the debt, sending of 1099c notifies the IRS that the creditor has cancelled the debt, and the IRS then considers the debt to have become income. if you then pay taxes on the amount, you have affirmed the cancellation.

It is acknlowledged that some creditors take the postion that sending of a 1099c does not necessarily cancel the debt, and thus will continue to report a balance.

Do a bit of googling on the subject, and you will see the controversy.

Notwithstanding that controversy, which is a minority opinion, I would clearly dispute their lack of update to $0, and if they verify, send a complaint to the CFPB.

Hopefully, the CFPB will one day choose to weigh in on the credit reporting implications of a creditor sending a 1099c, partcularly when the consumer has thereafter padi the taxes, clearly meaning it is no longer debt to the consumer, but income.

Yuu can optiionally or additionally, if angered enough, choose to file your own civil action shoud they fail to update after a dispute.

Either way, a resolution of this continued controversy is clearly needed, as it recurs here on the site..........

Re: 1099-C paid but balance remains

nycfico — Tue, 08 Mar 2016 02:38:20 GMT

I have struggled with this too...I was making payments to the tune of $900 a month to JPMC on a $30,000 debt. I had it down to $20K and suddenly got a 1099, cancelling the debt and triggering a tax liability.

And now, about 6 years later, I paid the taxes and still have this $20K reporting on my credit report and as late. In my case, I'm just biding my time as it's scheduled to fall off in September this year (perhaps earlier with early exclusion). It's frustrated the you know what out of me, but I'm just allowing time to cure it and be done with it without spending time on it.

I realize it's a grey area, but I find it completely unfair that the debt is cancelled, you've paid your taxes on it, and yet it still reports a balance and as late.

Good luck to you....how far out are you from having it fall off the report?

Re: 1099-C paid but balance remains

Anonymous — Tue, 08 Mar 2016 05:10:46 GMT

@lindsaydruart wrote:
A 1099-C doesn't wipe out the debt. It's just a way for the company to get a tax credit on your debt. You still owe.

Not entirelly true. The issuance of the 1099C does not allow them any sort of tax benefit. They get that from the charge off itself. The only tax benefit they get from the charge off, is that they get to subtract the charged off amount from their profits.

The 1099C is a requirement that the IRS imposes on them under specific conditions - most common being the decision to no longer pursue collection activity on the debt. The law is actually unsettled on the issue of whether the debt is still owed or not. Some lenders will consider the debt discharged, but others argue that the 1099C is only an administative requirement of the IRS and does not discharge the debt.

Re: 1099-C paid but balance remains

Jamgal40 — Tue, 08 Mar 2016 21:36:38 GMT

Thanks. Unfortunately, it will not be deleted from my reports until 3/2018. I would be ecstatic if it was falling off this year or even next year. Lesson learned though.

@nycfico wrote:
I have struggled with this too...I was making payments to the tune of $900 a month to JPMC on a $30,000 debt. I had it down to $20K and suddenly got a 1099, cancelling the debt and triggering a tax liability.

And now, about 6 years later, I paid the taxes and still have this $20K reporting on my credit report and as late. In my case, I'm just biding my time as it's scheduled to fall off in September this year (perhaps earlier with early exclusion). It's frustrated the you know what out of me, but I'm just allowing time to cure it and be done with it without spending time on it.

I realize it's a grey area, but I find it completely unfair that the debt is cancelled, you've paid your taxes on it, and yet it still reports a balance and as late.

Good luck to you....how far out are you from having it fall off the report?

Re: 1099-C paid but balance remains

Jamgal40 — Sun, 10 Apr 2016 02:17:17 GMT

Finally!! After disputing with all three CRAs this account was removed from all three.

Re: 1099-C paid but balance remains...UPDATE

RobertEG — Sun, 10 Apr 2016 02:20:27 GMT

Did the CRA formally make a finding, or was it deleted voluntarily by the credtior?

Re: 1099-C paid but balance remains...UPDATE

Anonymous — Sun, 10 Apr 2016 02:45:45 GMT

I had a simular sitation I was 1099 for one, paid the collection agency the amount. So i paid the collection agency the full amount was was still 1099 for the full amount by the OC.....makes no sense that i paid a 1099 from the OC on a debt that i paid with a collection agency.....there was techinaclly no debt forgiveness....

Re: 1099-C paid but balance remains...UPDATE

AutoBot — Sun, 10 Apr 2016 12:34:41 GMT

Looks like I am going to have to dispute 2 Synchrony bank accounts with the CRAs. It's good to see that your dispute was successful.

Re: 1099-C paid but balance remains

elim — Sun, 10 Apr 2016 12:52:44 GMT

@Jamgal40 wrote:
Finally!! After disputing with all three CRAs this account was removed from all three.

sweet! congrats

Re: 1099-C paid but balance remains...UPDATE

Jamgal40 — Sun, 10 Apr 2016 22:03:36 GMT

@Anonymous wrote:
I had a simular sitation I was 1099 for one, paid the collection agency the amount. So i paid the collection agency the full amount was was still 1099 for the full amount by the OC.....makes no sense that i paid a 1099 from the OC on a debt that i paid with a collection agency.....there was techinaclly no debt forgiveness....

Harley14 sorry to hear that. The OC never sold the debt so luck was on my side.

Re: 1099-C paid but balance remains...UPDATE

Anonymous — Sun, 10 Apr 2016 23:59:00 GMT

I didn't mind the 1099-c. Was a small almost 450ish dollars. Just wondering if that's actually legal? Should I have to pay taxes on a debt I paid? They were also the only ones to 1099 me the rest I also paid with a CA

Re: 1099-C paid but balance remains

Anonymous — Mon, 11 Apr 2016 01:17:42 GMT

@lindsaydruart wrote:
A 1099-C doesn't wipe out the debt. It's just a way for the company to get a tax credit on your debt. You still owe.

Nevermind, I replied to this previously... Shoulda read the whole thread.

Re: 1099-C paid but balance remains...UPDATE

Anonymous — Mon, 11 Apr 2016 01:20:35 GMT

@Anonymous wrote:
I didn't mind the 1099-c. Was a small almost 450ish dollars. Just wondering if that's actually legal? Should I have to pay taxes on a debt I paid? They were also the only ones to 1099 me the rest I also paid with a CA

I would not do so. I would simply claim the debt was paid therefore the 1099C was sent in error.

Re: 1099-C paid but balance remains...UPDATE

Anonymous — Mon, 11 Apr 2016 01:52:29 GMT

@Anonymous wrote:
@Anonymous wrote:
I didn't mind the 1099-c. Was a small almost 450ish dollars. Just wondering if that's actually legal? Should I have to pay taxes on a debt I paid? They were also the only ones to 1099 me the rest I also paid with a CA
I would not do so. I would simply claim the debt was paid therefore the 1099C was sent in error.

already did my taxes, they are sent in and long gone LOL. I guess i wonder if I can use it to my advatage tho

Re: 1099-C paid but balance remains...UPDATE

Anonymous — Mon, 11 Apr 2016 02:04:22 GMT

@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
I didn't mind the 1099-c. Was a small almost 450ish dollars. Just wondering if that's actually legal? Should I have to pay taxes on a debt I paid? They were also the only ones to 1099 me the rest I also paid with a CA
I would not do so. I would simply claim the debt was paid therefore the 1099C was sent in error.
already did my taxes, they are sent in and long gone LOL. I guess i wonder if I can use it to my advatage tho

I would request a corrected 1099C from the OC, then you can file an ammended return. I'm surprised they did it for only $450 - the IRS requirement is for $600 and up.

Re: 1099-C paid but balance remains...UPDATE

Anonymous — Mon, 11 Apr 2016 02:12:44 GMT

I've already had more trouble with the IRS than I can deal with lol. Right now I'm wrapping up a 43k debt. The tax liens are coming off. It's just not a boat I wanna rock right now. Hahaha