Ask Experts Questions for FREE Help !
Ask
    HessA's Avatar
    HessA Posts: 3, Reputation: 1
    New Member
    		  
    #1

    Sep 10, 2007, 03:21 PM
    How does a 1099c affect my credit?
    If I work out a settlement amount with a credit card company and they issue me a 1099c on the difference, how does this negatively affect my credit?
    ebaines's Avatar
    ebaines Posts: 12,132, Reputation: 1307
    Expert
    		  
    #2

    Sep 11, 2007, 01:11 PM
    A 1099-C is a "Cancellation of Debt" form that states that you have income attributed to the forgiveness of the debt. For example, if you owe $1000, and the company settles with you for only $750, then the extra $250 is considered income to you. The company sends you the 1099-C to document this. They also send a copy to the IRS, so you will have to report this on your income taxes as "Other Income" on your Form 1040, and pay Uncle Sam his due.

    The 1099-C by itself does nothing to your credit rating; however, the company who settled with you is sure to let the credit reporting agencies know about what happened.
    HessA's Avatar
    HessA Posts: 3, Reputation: 1
    New Member
    		  
    #3

    Sep 17, 2007, 01:51 PM
    Quote Originally Posted by HessA
    If I work out a settlement amount with a credit card company and they issue me a 1099c on the difference, how does this negatively affect my credit?
    So why do they report it to the credit reporting agencies if it has no affect on my credit rating? The credit card company told me that it would negatively affect me, but I didn't know if that was a line they were just feeding me or not.
    ebaines's Avatar
    ebaines Posts: 12,132, Reputation: 1307
    Expert
    		  
    #4

    Sep 17, 2007, 02:13 PM
    They report it to the credit agencies because you failed to pay what was owed, and consequently you are considered a worse credit risk than other customers who pay their full bill.
    HessA's Avatar
    HessA Posts: 3, Reputation: 1
    New Member
    		  
    #5

    Sep 20, 2007, 03:18 PM
    So in your opinion, is is better to suck it up and pay the full amount on the credit card balance, or pay a good deal less to the credit card company and then deal with it being reported to the credit agencies?
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,302, Reputation: 7692
    Expert
    		  
    #6

    Sep 20, 2007, 06:56 PM
    It is better to work out the deal in writing, where you pay less amount, but they report it as paid not paying less than full or settlement.

    The actual 1099 has nothing to do with your credit report it is a IRS thing,
    It is the report they file with the credit bureau that effects your credit.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #7

    Sep 20, 2007, 07:19 PM
    What affected your credit was a report that you paid less than the amount owed as part of a settlement. The 1009C was just the mechanism for that reporting.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Covenant not to collect - affect on the credit report [ 3 Answers ]

We are being sued in a civil suit because I pushed (horse play) my friend off a boat into the water and the boat (no I am not the owner) was parked in an area where when he went into the water, he hit a sand bar and broke his ankle. Our Home Owners Insurance refused to cover it saying that it was...

Does prequalifying with different mortgage lenders affect my credit score? [ 15 Answers ]

Hello: Can I please get some assistance. We are in the process of putting our house for sale and buying another. I am on the Pre-qualifying Process so more than likely my actual credit has not been used, ( if I am mistaken please correct me:) ). The next step will be to get Pre-approved ( I...

Foreclosure process and affect on credit [ 1 Answers ]

I am current on my mortgage payments however, my supportive income has been lost due to our separation. We were not married and his name was not on my home loan. I have attempted to sell the house in the past with no luck. I'm raising my children alone and it will be a true struggle to make the...

Does wife's credit affect mine? [ 1 Answers ]

My wife has $5880 in credit card debt that has been turned over to collections. Do I have to worry about the debt affecting my credit? Will a judgement affect me? How likely is it that the company will sue? Can the company go after our joint checking account? How about a joint CD? I live in...

View more questions Search