1099C

Submitted by Utstark on Wed, 08/15/2007 - 15:09
Forums
Credit repair

If I can't afford to pay the settlement offer on a debt, would it be better to request a 1099c from them and pay 20-25 % taxes to the IRS? Also, would the 1099c be filed for the current year or the year of the original debt?

Laura

Actually it depends on what you can afford. If paying the taxes will be easier go for it.

Thu, 08/16/2007 - 05:31 Permalink
Morningstar

The 1099-C is filed for the current year. Your debt is forgiven this year, therefore, it is considered income this year.

Were they offering you a 1099-C? I've not really heard of a creditor just giving up on a debt...it's usually just sold.

Thu, 08/16/2007 - 06:09 Permalink
Laura

For your second question

Also, would the 1099c be filed for the current year or the year of the original debt?

You will have to file for the year of the original debt.

Thu, 08/16/2007 - 06:44 Permalink
Anonymous (not verified)

Income from the discharge of an indebtedness arises in the calendar year in which an obligation is either satisfied at less than face value, or is forgiven.

Thu, 08/16/2007 - 13:40 Permalink
Anonymous (not verified)

The IRS actually defines when a debt is deemed as "cancelled" - mainly 1) if settled for less than full balance or 2) if there has been no bona fide collection activity on the account for 3 years (??). You can go to the IRS website, and lookup instructions on 1099C for the actual period.

You really cannot request that a debt be cancelled. As long as the creditor intends to collect on the debt, and as long as they actually do perform collection activities within the IRS time frame, it is not cancelled.

Sat, 09/01/2007 - 00:23 Permalink
cajunbulldog

Guest is correct,most 1099c are issued when part of a debt is forgiven.If you are issued one you would owe a tax obligation on it unless you can show the Irs that you meet their definition of insolvency.

Sat, 09/01/2007 - 10:56 Permalink
marie cook (not verified)

I have a 30K credit card debt. Bank settled for $8500. They will send me a 1099C. How much will I have to pay to the IRs.

Thu, 09/27/2007 - 15:34 Permalink
Morningstar

It depends on your tax bracket...but as I understand it, you've added 21,500 to your income.

You can try calling the IRS for assistance; look into what constitutes insolvency.

Fri, 09/28/2007 - 23:01 Permalink
carol

As far as I know, 1099 C form is sent only if the difference between the amount outstanding and the amount for which your property has been sold under foreclosure exceeds $600. However, if you can pay off the difference, then you need not fill up the 1099 C form.
The 1099 C form is send only after the property is sold.

Tue, 03/24/2009 - 06:51 Permalink
Nicko (not verified)

I know my vacant land property was foreclosed upon, only because I searched the records online. The bank has never sent me any notice other than their intent to foreclose way back in Feb 2009...nothing since. I expect to receive a 1099c this year for the charge off but what do I do if I don't receive one? I don't know what the amount will be.

Fri, 01/08/2010 - 11:46 Permalink
cinnamngrl

Ustark, did I read you right? are you planning to ask for 1099C instead of paying the debt? That won't work. they will sue you first.

Fri, 01/08/2010 - 23:09 Permalink
Kellie (not verified)

I recieved a 1099c from a very old collection debt. I have been on unemployment for over a year now. How will that effect me. On taxes.

Tue, 02/09/2010 - 20:50 Permalink
Aaron

Hello Kellie,

If you have received a 1099 c , it means that the debt has been forgiven. This will be reflected on your credit report. Whether or not you need to pay the taxes, depends in your case on insolvency. If you were insolvent at the time of settlement, that is if your debts exceeded your assets, you may not be liable to pay the taxes. For that you need to fill the IRS form 982 or attach a letter detailing your insolvency, with the tax return.

However regarding the tax payment you can also contact a tax adviser.

Thu, 02/11/2010 - 07:38 Permalink
N (not verified)

I received a 1099a for a foreclosure in the beginning of 2009. In mid 2009 they actually sold the property. The FMV value is different that the actual sold value. I reported the 1099a as a sale with a capital gain on Schedule D of the 1040 and I was able to fall under the exclusion bracket and not pay taxes. Now I am wondering were they supposed to send me a 1099c for the ACTUAL sale and I report the difference of the actual sale price in Mid 2009 on IRS form 982? Or will they send this in the following tax year?

Tue, 03/02/2010 - 02:17 Permalink
Aaron

Hi N,

If you are served a 1099A, and the Fair Market Value (FMV) is less than the debt, then you may get a 1099C next year. However, if the FMV is greater, you may not receive the 1099C.

Hope this helps.

Regards,

Aaron.

Tue, 03/02/2010 - 10:02 Permalink
patty (not verified)

I recieved a 1099a for foreclosure in 2006...I recieved nothing else. The fmv is $117,000 the amount owed is $105,000. I did my taxes this year and inquired once again if I should be getting a 1099c. The tax adviser advised that since the FMV is greater than what is owed, that I would not have to claim anything. Just checking to make sure that I haven't missed something that is time sensitive and I end up owing for late filing.

Fri, 03/05/2010 - 00:08 Permalink
fireyone

Wow that is good to know. Also for anyone who may need this info...if you had a spouse pass and this was the reason for your hardship they will forgive the debt. My mother in law got one of those forms after they sold off her house she let go and since she lost it due to my father in law dying she she did not have to pay.

Fri, 03/05/2010 - 03:13 Permalink
Derrick (not verified)

You wrote "If you are served a 1099A, and the Fair Market Value (FMV) is less than the debt, then you may get a 1099C next year. However, if the FMV is greater, you may not receive the 1099C. "

I received 1099A for the first loan with FMV=250k, my first loan was 240k and second is 60k. But I haven't received the 1099C from the second lender. What is going to happen?

Fri, 04/02/2010 - 21:23 Permalink
Ric (not verified)

Property was Deeded in Lieu of,in 2005 to lender & lender paid me 1K to do it..then in 2008 lender sent a 1099C claiming 98K to IRS, few months back IRS sent me a tax bill for the 1099C of 2008. wrote to IRS explaining, now IRS is asking for FMV and said they would adjust 08 tax bill.. What does all this mean.. from my tax working I should not have any tax bill..? never received a 1099A or C from lender.. Have no clue.. any light on this ? thanks

Wed, 04/14/2010 - 21:00 Permalink
cgar (not verified)

If I got a 1099 c of 4983.89 how much do I need to pay

Thu, 04/15/2010 - 01:45 Permalink
sue (not verified)

My ex and I settled for less than we owed on our credit cards in 2005 and we never claimed it as income on our taxes as we did not know anything about it, and to my knowledge never received any 1099's (which I know the irs does not take into account) ... my question is, can the irs still come after us 5 years later for not reporting the settled amounts as income? they have never done so to this point

Fri, 05/21/2010 - 17:34 Permalink
Aaron

Hi Ric:

Can you please me more clear on your question. Once you have mentioned that lender sent you a 1099C, and again you are saying that you never received 1099C from lender.

cgar:

Can you provide more details on your credit?

sue:

If you have not received any 1099C or A forms, then you need not worry about reporting this to the IRS.

Thanks,

Aaron

Tue, 05/25/2010 - 11:30 Permalink
Bubba (not verified)

I had a credit card debt of about $6,000 in 1998, which I did not pay. The bank, and then credit agencies hounded me for five or six years and then I heard nothing further. Today I received a call from a new credit card agency advising that they had just purchased my debt, which they calculate to be $24,000 and that they will send in a 1099c unless I pay them 25% of the debt. Am I dead?

Tue, 06/29/2010 - 02:30 Permalink
alberto (not verified)

My investment is now close to $120,000, I owe 219,000 and I bought it
for $255,000. I need to go through a deed in lieu of foreclosure since it
is impossible to keep paying it at my 76 years old.
What can I do to avoid a deficiency judgment?

Sat, 07/31/2010 - 22:51 Permalink
Aaron

Hi Bubba:

Please provide details on which state you are in, and when was the last payment made on this account? The Statute of Limitations on this debt may have expired.

alberto:

You can do a short sale on the house. In case of short sale, the deficiency amount is forgiven. However, you will have to request the lender to agree to short sale. You can also take help from an attorney.

Thanks,

Aaron

Mon, 08/02/2010 - 12:05 Permalink
Bubba (not verified)

Aaron - I am in California where I understand that the SOL is seven years. I don't have records that go back that far but I don't believe that I've made a payment since 2000. The three credit bureaus do not show an unpaid debt. The collection agency (CRA) recently made an unauthorized credit inquiry - altho I don't know how you can determine if it's a "hard" inquiry. Since making my entry of 6/26/2010, I have received a letter from CRA asking me to either pay the debt or full, or make payment arrangements. I have declined to do either and have sent CRA a Debt Validation letter.

Tue, 08/03/2010 - 15:59 Permalink
Aaron

Hi Bubba,

You sent credit reporting agency (CRA) a debt validation letter? Debt validation letter is sent only to collection agency. You are required to sent debt verification letter to the CRA. If you don't have listings on last payment, you can request the CRA to provide you copies of the report with the last payment date on them. If they can't send you proof, then they are supposed to remove the item from your credit report. For more details refer http://www.creditmagic.org/repair/about9714.html#40242 .

Hope this helps.

Regards,

Aaron

Wed, 08/04/2010 - 11:17 Permalink
cinnamngrl

California Statutes of Limitation

Written agreements: 4 years, calculated from the date of breach.

Oral agreements: 2 years.

The statute of limitation is stopped only if the debtor makes a payment on the account after the expiration of the applicable limitations period.

Wed, 08/04/2010 - 11:27 Permalink
Bubba (not verified)

Thank you for your response. Sorry for the confusion but in my case CRA stands for Credit Recovery Associates, a collection agency. The four year SOL has clearly past as the original creditor, MBNA, sold out to B of A five years ago - and I did nothing to toll the statute. I think that I had an MBNA credit card, but that was 12 years ago. My main concern here is the 1099c. I will report further when I hear back from my CRA.

Wed, 08/04/2010 - 16:34 Permalink
cinnamngrl

MBNA would have written off the loss years ago. You would receive a 1099c in january. The thing they often don't send anything. You are not responsible unless you receive it.

Wed, 08/04/2010 - 20:10 Permalink
mave (not verified)

i have credit card debt that has never been settled. the statue of limitations ran out last month on the debt. will i still get a 1099c. or when will i get anything about that? if i never settle the credit card debt what happens then with the 1099c. the credit card was 2000.00 now with interest it is 3545.00 which amount will you have to pay taxes on?

Thu, 10/14/2010 - 17:48 Permalink
Abdelfettah (not verified)

The best thing to do is get a free online copy of your crdeit report by going to experians website. On the form you can dispute the debt and the company may remove it. It may come off on its own after several years but there is no limit to how many times and can be re-reported

Sat, 09/29/2012 - 21:33 Permalink
matzcrorkz (not verified)

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Tue, 08/05/2014 - 08:49 Permalink