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DansFan13 · Mar 16, 2009, 12:51 PM

If you receive a 1099C cancellation of debt form and claim it as income on your tax return, can the cc company continue to try and collect the monies from you? Acct went to bad debt in 2003 and in 12/2007 a 1099C was received. Before then, no other contact at all. Filed amended return in 2/2008 to add this 1099C as income and just 2 weeks ago, the cc company called and said we still owe. Claim the 1099C cancellation of debt form is not what it says and we still owe. Today received a letter stating they are going to take the collection as far as they can to collect the debt. Lived in PA at time of debt now in FL. Statute of Limitations is 4 years in both states. Do we owe on this debt? Please help. Both of us are on SSD and own nothing but our home. Thank you.

ScottGem · Mar 16, 2009, 12:54 PM

A 1099C is issued when the debt is forgiven. Its essentially a gift to you of the balance. So, no, once issued, there should no longer be any collection effort.

DansFan13 · Mar 16, 2009, 01:02 PM

Scott, thank you for the info. When I spoke to Discover, the insisted that "I misunderstood" the meaning of the 1099C. The letter I received today really bothers me because they are going to take it as far as they can. How far can they go when I have the 1099C in my possession? Thank you so much.

ScottGem · Mar 16, 2009, 03:39 PM

From what I can find out, unless there is a bankruptcy involved, the 1099C is a forgiveness of the debt. That means they can no longer collect.

Did you actually speak to Discover or a collection agency?

DansFan13 · Mar 16, 2009, 05:07 PM

Hi Scott, Discover is who I spoke to. From what I understand they do not use outside agencies and the call ID identified the call as Discover Financial.
Scott, one more question. 1099C aside, does SOL apply here since last pmt was in 2003 and write off was 12/03.
Thank you so much for all your help. I do feel so much better.

ScottGem · Mar 16, 2009, 05:10 PM

SOL might be applicable. What does the person you spoke to think you misunderstood?

DansFan13 · Mar 16, 2009, 05:13 PM

I was told that the 1099C does not mean that the debt is dismissed and that all I did was report it as income to pay taxes on it. They tell me I still owe the debt. Didn't they send the 1099C to me so they could report it as a loss on their taxes? Confused? You bet.

ScottGem · Mar 16, 2009, 05:18 PM

Google 1099C. Find and read the IRS rules about it. The next time they call cite the IRS Regs to them. As far as I know an 1099C means the debt is forgiven.

DansFan13 · Mar 16, 2009, 05:21 PM

Scott, thank you so much. I will do more research but what I have discovered is exactly what you say. A 1099C is a forgiven debt because the company feels you will not pay and they will get a tax break on the uncollectible debt. Hearing it from an actual person makes the difference. Not that I don't trust internet info, it is just that the info seems more real coming from an actual person. Thanks again for a good nights sleep.

soobad · Mar 20, 2009, 01:13 PM

Don
T know how old this question is but I will tell you what I did on my 1099c I received this year 2009. On filing for income tax you can file a form 928-a insolvency form that means your debts exceed you assets, and you don't claim the monies on the 1009c. Also if they sent you this 1009c they can not go after the debt. And social security money is exempt from debt collectors or judgements or garnishments and the statue of limiations has run out. You can send them a certified letter requesting they cease and desit from contacting you or you can and will sue as there actions are agaist the fair trad and debt collections regulations.

DansFan13 · Mar 20, 2009, 08:29 PM

Thank you soobad. I kind of thought the SOL had expired since it is 4 years in Pa and the account went to write off in Dec 2003. Also, 4 years SOL in Fl as well, where we are now. We've had absolutely no contact with Discover since the write off. I just don't understand what they are trying to do. THEY sent the 1099C form in 07 and yet claim "it does not mean the debt is cancelled." Rec'd another letter today stating they are going to take the next step. Not sure what they mean but I hate dealing with this. Don't they know SOL is expired? Thanks to you all for your help, comments and support. Making the decision to allow the acct. to go to write off was a very difficult but necessary one. When you become ill, what else can you do when they refuse to work with you. Thanks again.

ScottGem · Mar 21, 2009, 04:38 AM

Originally Posted by DansFan13

Don't they know SOL is expired? Thanks to you all for your help, comments and support.

First, When a debt is charged off, written off etc. This has little to do with the debtor. Such an action is purely a tax maneuver on the part of the creditor. They are saying they don't think they can collect on it so they want to take the loss now. They are still entitled to try and collect on the debt. Nor do you let it go to writeoff, that's THEIR decision. Your decision was to default on it.

Second, SOL laws are complex. While it may seem to the layman that the SOL has expired, it may not. I just saw case law for AZ that says the courts will use the longer period if there is a conflict between types of accounts.

Third, a debt is collectible until it is paid or cancelled. The SOL expiring just limits the tools they have to collect.

However, none of that applies to your situation. The issuance of the 1099C constitutes a forgiveness of the debt. It cancels the debt. That is the only thing you need to deal with. So you can respond to any continued collection effort by using that fact to tell them to cease and desist.

DansFan13 · Mar 22, 2009, 08:34 PM

ScottGem, you are a wealth of information and I can't thank you enough for your help. If I send the cease letter, what happens? Will sending this letter start the SOL again? Right now they are still sending correspondence to our old address. They did get my new phone number here in FL but still send mail to the old address. I've seen the cease letters online and understand they must abide by them. Do I attach a copy of the 1099C and my amended return or just mention it in the letter? I did tell the woman that called about the 1099 form and that's when I was told I did not understand what the form meant. It actually said on the form "Cancellation of Debt" along with the full amount and that is exactly what I put on my amended return. I just don't want to do anything that could harm me and trigger their wrath to file suit. That scares the *&^* out of me. SSD is our only income. Spare change in this house is unusual let alone some spare dollars. Thanks again for any and all help/suggestions you give. You seem to know what you are talking about so trust is not an issue. Thanks again.

ScottGem · Mar 23, 2009, 06:22 AM

No it won't start the SOL and that's really a moot point because even if the SOL hasn't expired, the fact that the debt was forgiven means the SOL no longer applies.

You don't need to send a copy of the 1099 though it wouldn't hurt. But you do need to cite the law that the 1099 is a forgiveness of the debt and therefore ends collection. I would call the IRS and get the exact code section to include.