1099-C? Anyone else have this issue with paid debt?

[jcstarkey8826]

I received a 1099-C for a student loan that I paid a CA for. I found an article online that made me believe they had to own the debt, or that me paying settling the debt would suffice not having to claim this as income. It was paid with a debt collector. Here is what I read as the reason for getting one:

1.) You have a debt that was never paid, or partially paid, sold to a collection agency who still couldn't collect, etc. Whatever--point is, whoever owns the debt is writing it off as a loss. This is not very common because unless you file for bankruptcy, most collection agencies or banks won't simply "give up" on you. If anything, they'll file for a judgment against you for the debt, interest, collection costs, capitalization fees, etc. It is very unlikely that you're receiving a 1099-C simply because the bank said "ah, lets write this one off." With the problems lenders are having these days, no bank is going to surrender debt as a loss.

Anyone have experience with this?

[Shogun]

Did you PIF the CA?  If so, there would be no reason for a 1099-c.  The debt has been paid, it doesn't matter if it was paid to the OC or the CA, it matter's that it was paid.

[jcstarkey8826]

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@Shogun wrote:

Did you PIF the CA?  If so, there would be no reason for a 1099-c.  The debt has been paid, it doesn't matter if it was paid to the OC or the CA, it matter's that it was paid.

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I settled for half, but the amount is the full amount listed. I talked to the lady doing my taxes and she said she can get rid of it for me and that I wont have to pay that. I just hope she is doing it the right way not to mess me up. Im getting a second opinion to make sure.

[Anonymous]

Any time you settle a debt, without it saying the debt was considered paid in full,  they can come after you for the rest.

If the 1099-C is for that amount, then, yes, it is possible.  If it for the entire amount they can't do that.

A CA can give a 1099-C but they do need to own the debt.

[jcstarkey8826]

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@Anonymous wrote:

Any time you settle a debt, without it saying the debt was considered paid in full,  they can come after you for the rest.

If the 1099-C is for that amount, then, yes, it is possible.  If it for the entire amount they can't do that.

A CA can give a 1099-C but they do need to own the debt.

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thats the weird part. the debt was sold to a CA (for sure sold, could not pay OC, I tried) but the 1099-c was from the OC and the original amount.

[Anonymous]

They can't do that.  If they sold the debt to the CA, they can no longer attempt to collect on it.  Or issue a 1099-C.

Sometimes an OC will not let you pay them when they have only assigned the debt to the CA.  You need to find out for sure.

If that is the case the CA should have let the OC know it was paid. 

[jcstarkey8826]

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@Anonymous wrote:

They can't do that.  If they sold the debt to the CA, they can no longer attempt to collect on it.  Or issue a 1099-C.

Sometimes an OC will not let you pay them when they have only assigned the debt to the CA.  You need to find out for sure.

If that is the case the CA should have let the OC know it was paid. 

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Thats what it seemed to read online to me, but I have no idea. On my credit report it says the debt was sold under their account.

[Anonymous]

If it was sold they cannot send a 1099-C.  Period.

If it was paid the CA can't send one either.

You can always write a letter to the IRS and give them proof it was paid to the CA.

[jcstarkey8826]

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@Anonymous wrote:

If it was sold they cannot send a 1099-C.  Period.

If it was paid the CA can't send one either.

You can always write a letter to the IRS and give them proof it was paid to the CA.

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I will do that! this way I dont have to worry about the tax prep being shady. Thanks for the input, I feel confident in my understanding now!

[Shogun]

+1  If they sold the debt, they have no claim to any of it.  They can't issue a 1099-C.  That's double dipping.