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

[Anonymous]

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.

[Anonymous]

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

[Anonymous]

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.

[Anonymous]

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

[Anonymous]

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.

[Shogun]

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.

[Anonymous]

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

[Shogun]

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@Anonymous wrote:

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

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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.

[Anonymous]

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.

[Shogun]

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@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.

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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.