1099 c

You received the 1099c form because your debts were forgiven by the credit union. You have even claimed it on your taxes. Now the attorney cannot collect the same debt from you. I will suggest you to write a cease and desist letter to the attorney mentioning the fact that you don't owe the debt as it has been forgiven by the original creditor.

Yep???Anna is right. To know how to write a Cease and Desist letter, you may visit the following link:
http://www.debtconsolidationcare.com/letters/cease-desist.html

Anna is NOT correct. Issuance of a 1099C for bad debt does not extinguish the debt. The IRS has this info on their own website.

All a 1099-C means is that the creditor "wrote off" the debt for tax purposes and the IRS now considers that amount as income to you (since you supposedly borrowed and had the use of the $ and did not pay it back). They want their tax dollars on that money.

They have specifically stated that that does NOT mean that the debt is gone, cannot be collected nor sued upon. It just means you didnt pay on it to bring it current for a 180 ish day period.

Dont expect to go into a court (if that is what happens) and tell a judge that you paid taxes on this amount already and therefore dont owe it.

And yes, its not fair but you could at the very worst be stuck with paying taxes on the forgiven amt to the IRS and still sued for the full amount in a local court. Fair? No. Legal? Yes.

Edit on above post. I was making an assumption in my post above that this was debt that had just been abandoned and charged off now that I see the word "forgiven" I need to clarify.

IF this debt you were 1099 ed on was part of a settlement and IF you have the settlement letter from the creditor forgiving it and IF you have some documentation that you did in fact make the required payment to complete your settlement THEN you are in a better position than I stated above, though it has little to do with you being issued a 1099

If you are sued for this "forgiven debt" and IF all the above is true that means that the collector you made your settlement deal with sold the "forgiven" part off to a debt buyer most likely (quite common). In short they violated their part of your settlement agreement.

If you have all your documentation you should be able to scare the new group away with it, or if you sued present it all and the 1099 to the judge and make it go away. If you dont have your proof though its up in the air as to what the judge says. Judges vary wildly from state to state and even county to county in how they handle civil debt cases apparently. They shouldnt, but they do.

If you just stopped paying on it, the creditor wrote it off they will also issue you a 1099C and my above post applies.

Sorry for the confusion. Im sleepy.

so If I do not have anything from the creditor than I will still be liable for the debt? I did talk to someone in the collections department regarding them forgiving the debt and just issuing a 1099. I never received a written response and just Assumed that is what happened. Should I contact the attorney?:confused:

would not a 1099 c be a cancellation of debt, then considered income, and no longer collectable by creditor?

I understand your thought process. It "seems" like if you pay taxes on the amt that was forgiven it should be a done deal right? I thought same thing when I researched it back before my own default.

Apparently it doesnt work like that.

Creditors must "charge off" debt at around 180 days of it not being made current. This only means they have to change it from a possible asset to a liability. They have no choice in this. Our IRS overlords tell them to. They are also supposed to issue a 1099 c to the person whos act was charged off. This is because the IRS wants "their" tax dollars on that amount. So it looks like the debt has gone poof right? Unfortunately not.

The debt still exists and as such it is still collectable. What almost always happens is that a junk debt buyer buys the charged off portion from the original creditor. Then THEY (as the "new" creditor" come after you to try and threaten, cajole, sue or whatever to get you to pay. Unless its a very specific set of circumstances (like the debt was a first home mortgage) so it is covered by some other law the debt still exists, is still collectable and if your SOL has not run out, is still actionable in court.

If its settled the only thing thats diff here is that the IRS still gets their money (unless you go insolvency route) but then the debt is supposed to be gone according to the settlement agreement)

Flying can chime in here as hes the true tax guy but if you just quit paying an acct, got a 1099c for a charged off acct your suffering is not over yet.

The IRS could care less whats going on between you and your creditor as long as they get their blood money for what they consider "theirs".

Molly, did you settle this debt with the lender or was this just a charge off? That's the difference.

If you settled, then the 1099C is for the amount that was "forgiven" and cannot be collected as the account was settled for less than the full balance.

If you didn't, then it's for the whole amount and can still be collected on.