Debt collectors, Debt forgiveness & the IRS

Passed SOL only implies that the creditor can't sue you to collect the debt but you would still owe the money. However, you have mentioned too many things in your post about bankruptcy, debt management and debt validation that I'm really confused.

Have you sent any of these so called bottom feeders a DV Letter? If not send a DV letter to the current CA asking for full validation and proof that the debt is yours. Send the letter CMRR. Once they receive the tracked letter, dispute with all the CRA's. Once the CA receives your letter they must not verify with the CRA's they must say the debt is in dispute. If the CRA verifies the debt they are in violation. If you do not receive full proof of the debt within 30 days send a letter to the CRA's with a copy of your letter to the CA and include a copy of your RR proving the letter was sent. If the CA cannot validate the debt with full proof the CRA must delete it from your credit report.

I personally would not pay this debt as it will re-age especially if the debt is out of SOL and most likely a CA who cannot validate and who realizes the consumer knows their rights will not go to the IRS unless the debt is extremely large. How much debt are we talking about here?

sc...i don't know why you are confused? i asked about debt forgiveness. what is it and when does it apply to them reporting the debt forgiveness to the irs as income? as i understand it and i;m not sure i do. that is why i am here.
i only mentioned the 3 things you are confused about in one sentence...why is that confusing?
i had a friend that received a letter from a dc earlier in the year and it mentioned the irs thing, and it was just an old reg. cc debt of only about 1k.
kf...thx but as i said in my op, i will be sending the validation letter asap. i never ever would pay this debt as they have pumped it up through all the dc's to now where it is about 1k+ and it was originally only about $500 from oc.
i am just don't know who and if they can call this a forgiven debt, which seems to be the key, and can then report it to the irs. are y'all familiar with this? its a "law"/statute now.

I am certainly no expert but my guess is it will not be reported to the IRS. I dont see any cause for forgiven debt as you put it but you can have it deleted based on the fact that they will not be able to validate it. Good luck.

let me try to clarify.if you settle either with the OC,a CA,or a JDB.the portion not paid is considred forgiven debt.example:

you have a cc debt of 5,000.00
you settle for 3,000.00

the 2,000.00 is considred forgiven debt.now if the OC charges off and sells the debt then it is the hands of the CA or JDB that bought it.now if the forgiven portion is less than 600.00 then nothing will happen.in the example i gave whoever the consumer settled with will file a 1099e for the 2,000.00 which will count as income for the consumer unless they are insolvent.if you pay the full balance to either the OC or CA then debt forgiveness doesn't apply.

thx paul but still alittle unclear. the sol in my state, tx, is 4yrs for cc debt. this is acct is very old and over 4yrs old. this was handed down from LVNV then to Resurgent, then to Capital mgmt. aren't they all sisters companies of each other?
i am not going to pay this debt no matter what. i did not have the funds to pay oc when they had it and now i sure am not going to pay some collection agency. no way. i have learned to live without good credit-it is possible-and my needs are few.
i am however going to still send a val. letter to keep them from filing in court. i already have a judgement against me from another debt coll. for another acct. because they lied to the court and said they summoned me--they did not, so i was unable to show up and could not afford to fight it. i did not know what to do then but now i do.
so i guess my big question is, has the government made it possible for these bottom feeders to not only make money if possible (but not from me) on this debt, but to also cause more debt with the irs/my filing?
if i send in a dv letter, and they do not validate in 30 days, can they do anything/send in info to the irs? if they cannot validate then can they file the amt they say i owe with the irs as forgiven debt? i just have not found out if my problem can be considered forgiven debt if i dv them and can they still file this amt with the irs?
i know i might be repeating myself but just want you to understand exactly what i am looking for.

I think what the OP is trying to ask, is if she doesn't pay the debt at all can the CA say it is a forgiven debt and turn it in to the irs. I myself have no clue, I would think not, but you never know. If you live in Texas and the this debt is over 4 years old, and you are positive it is out of SOL and you have no intention of paying it anyway, I would send the a C & D. If it is out of SOL, they can't sue, and even if they tried you would have a affimative defense with the SOL.

again if they settle a debt,and the forgiven amount exceeds 600.00 then the CA or OC has to file a 1099c for the remainder.that must be counted as income by the person who settled the debt.they will get a 1099c for the amount forgiven.the debtor could be insolvent therefore the 1099c wouldn't matter.

A CA can't just 'forgive' a disputed debt. In order to file it as forgiven, they would have had to take you to court and get it thrown out for SOL, THEN they can report it (if it over $600).

Sometimes they will use the IRS to threaten you into paying. It is a load of crap because only genuine debts can be forgiven and what most CAs have is not in the least bit verifiable. Besides that, I am betting that the OC reports the loss when they sell it off, so a CA can't then turn around and do the same thing.

thanks golden! what i was thinking somewhat but couldn't get a firm answer. i just couldn't believe some little ca would have that "authority". 'cause if that could happen then us debtor's wouldn't have any relief at all right? just didn't make sense but you never know.
and yeah!! to the very last sentence of your reply. of course the oc reports it...the only way they can recoup any loss.
so thanks again and i will go ahead and dv them.