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My Stepson borrowed money from me and has paid some of it back. However he has not paaid anything in the past 6 months. He did sign an agreement to pay back the loan. He has since moved out of the state and will not contact us. We only have a Post Office box address for him and an Email address. He will not answer any letters or Emails we send him. What can I do to collect the rest of the money he owes us. Can I file a 1099c against him?
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Originally Posted by aboutit2
Certainly you can file a 1099C - IRS looks fairly closely at these and if you ever get paid back you have to declare the "payback" as income but you can do it. I had a similar situation last year and my Accountant advised AGAINST the 1099C for fear of audit but the amount was large, it was a legitimate debt and I'll never see the money due to changed circumstances. If I do, well, then I'll have to declare it.
You can locate him using the PO address - he's not vanished, he's just missing.
Who was the lender, you or your husband or both?
Fileing a 1099c doesn't collect you any money. Just the opposite. It says you forgive the loan balance. It would allow you to take a tax loss and he would have to pay taxes on the forgiven amount as income.
If he doesn't pay your only recourse is small claims court. Even then, if you win, you still have the same problem in collecting. But you have some levarage in being able to garnish salary or bank accounts.
I'm not sure what a 1099c is. It sounds like small claims court is the way for you to go (assuming that the outstanding amount is $5000 or less.)
File a small claims suit against him.
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