@sjt wrote:
@RobertEG wrote:+1
A charge-off is simply the creditor's reporting of an internal bookeeping measure they took to move the debt from a receivable asset to what they consider to have become an uncollectible debt, and thus receive a tax writeoff. It does no excluse a penny of the debt, which remains fully collectilbe.
Sending a 1099c is a HUGE difference. It is their legal statement to both the consumer and the IRS that they have excused/cancelled the debt, usually for the full amount.
That amount of the prior debt no longer exists, and the creditor is required to update the balance, usually to $0 if the entire debt was cancelled.
Payment of taxes is not the determining factor as to their requirement to update, it is their official reporting that they have cancelled the debt.
You can choose to dispute first, either by sending the furniher a direct dispute or by sending the dispute to the CRA.
Probably a good idea to first show that you have exhausted your administrative remedies by disputing, and it will provide a formal statement that the furnisher has conducted a reasonable investigation, and if they verify, it would put into very question the reasonableness of their investigation. Additional fodder, should they verify, for your complaint to the CFPB. The only negative in first disputing is that it will result in a dispute flag posted to your CR, and thus temporarily removing certain information from your credit scoring. If you are not in the immediate process of using your score for apps for new credit, that may not be a factor.
Looks like an open and shut case if the sent a formal 1099c.
When a creditor sells the debt to a JDB, who gets to issue a 1099C?
Not certain, but if a creditor sells the debt, they no longer have any right to execute on it unless they repurchase it. No different than when your mortgage gets passed around after origination to my knowledge.
I'm not entirely certain that 1099C would apply in that second situation as the ability to write it off as miscellanous income to the consumer may not apply; but more importantly I don't see where it'd be advantagous to a JDB to do so anyway as they purchased the debt with the desire to collect on it and filing a 1099C doesn't make sense from their business model.
Unless the burden can get close to the current ~10K lien line when penalties and interest are added within the IRS 10 year statute of limitations (though I wonder if a 1099C filed more than 3 years after original filing date causes a re-assessment and if so, what date gets used... I'm just a layman) it probably doesn't have much pratical impact other than an instance where personal taxes are scrutenized from a non-trivial period in the past.
