1099c question

Dear Mary Jane Doe,

If a debt has passed its State SOL, then the collection agency can still ask for the payment but can????????t take any legal action. In such a case you need to send a certified letter to agency and ask them to cease all communications with them because the debt has already passed its SOL period.

Please note that if you make any payment in between then the SOL period gets reset. In many cases it has been observed that some creditors perform an illegal practice (according to 15USC1681s-2) of re-dating a debt. So, beware of this.

In case you are relieved from a certain amount of debt then that total amount would be considered as your income (as per 1099c). This forgiven amount may contain both interest rate and/or penalties. Hence, you are liable to pay tax on the total amount forgiven which may include rate of interest and fines.

Regards,

Phoenix

Hello,

In the above post I got logged out and thus my answer was posted as a Guest rather than Phoenix.

For more info on 1099c, you can also go through the pages:-

http://www.debtconsolidationcare.com/collection-agencies/1099C-questions.html

http://www.debtconsolidationcare.com/collection-agencies/debt-buying.html

Regards,
Phoenix

I don't understand how $1006 can become $4500. Another credit card I had in 2003, had a balance of $5895 at the time of the last payment. The balance now, according to the collector is $14,000. If I got a 1099c on that debt, which number would be considrered the 1099c amount?

Would the collector sending the 1099c have to have an accounting of the entire account beginning with when it was sold?

And, if there was no accounting of the account, how could a 1099c be issued?

Quote:

[quote=phoenix]A collection agency, that has bought your account from the creditor, usually possesses the entire accounting information of your account even before it was sold. It is because whenever a collection agency buys an account from a creditor, it becomes the creditor.[/quote]

I disagree. On a purchased debt, the CA may not have anything much to go on. On a purchased 13-year-old debt, the CA almost certainly has nothing more than an entry in a spreadsheet.

[quote=Mary Jane Doe]If a collector mails a 1099c, to you, for a 12 year old debt, that's long past the SOL, what does the collector need as proof the debt is REALLY yours?

If the debt collector says the debt is $4500 and issues the 1099c for that amount, do you have to pay tax on all the interest and fees that made the amount so high? (The debt was only $1006 12 years ago)[/quote]

Hi Mary, and welcome to the community.

To start with, let me ask you a few questions. Please don't give any personal information, but I need some facts to work with here.

What state do you live in?
What is the debt for [med bill, credit card, student loan, etc]?
Who is the CA that sent you the 1099?
Is this the first CA that's contacted you on this account?
When was the last time you made a charge or payment on the account?

As I said to Phoenix, if the debt is 12 years old, the liklihood of the CA having anything at all to go on is slim to none. Most times, when a debt is sold, all the buyer gets is a spreadsheet with names, address info, SS numbers, amounts, etc. Very seldom do they get anything at all in the way of supporting documentation with it. If it's been 12 years, then the debt has likely been sold and resold several times. That increases the liklihood thet there's nothing to go on.

As for them proving that the debt is yours for purposes of a Form 1099, I would think they'd need the same things that they'd need if they were trying to collect on it. In your place, I'd open by sending them a strongly-worded DV letter. This one would do nicely. Customize it to fit your situation, and be certain to print out and include the enclosure with it. Send the whole thing to them certified mail, return receipt requested. Then keep the little green card in a safe place, as proof they got the letter.

If they can't validate the debt [they won't], then they can't prove it's yours. If they can't prove it's yours, then they had no business sending that 1099. Give them a couple weeks or so to produce, then contact the IRS about the matter. They take rather a dim view of this sort of thing, if memory serves.

[quote=phoenix]A collection agency, that has bought your account from the creditor, usually possesses the entire accounting information of your account even before it was sold. It is because whenever a collection agency buys an account from a creditor, it becomes the creditor.[/quote]

I disagree. On a purchased debt, the CA may not have anything much to go on. On a purchased 13-year-old debt, the CA almost certainly has nothing more than an entry in a spreadsheet.

[quote=Mary Jane Doe]If a collector mails a 1099c, to you, for a 12 year old debt, that's long past the SOL, what does the collector need as proof the debt is REALLY yours?

If the debt collector says the debt is $4500 and issues the 1099c for that amount, do you have to pay tax on all the interest and fees that made the amount so high? (The debt was only $1006 12 years ago)[/quote]

Hi Mary, and welcome to the community.

To start with, let me ask you a few questions. Please don't give any personal information, but I need some facts to work with here.

What state do you live in?
What is the debt for [med bill, credit card, student loan, etc]?
Who is the CA that sent you the 1099?
Is this the first CA that's contacted you on this account?
When was the last time you made a charge or payment on the account?

As I said to Phoenix, if the debt is 12 years old, the liklihood of the CA having anything at all to go on is slim to none. Most times, when a debt is sold, all the buyer gets is a spreadsheet with names, address info, SS numbers, amounts, etc. Very seldom do they get anything at all in the way of supporting documentation with it. If it's been 12 years, then the debt has likely been sold and resold several times. That increases the liklihood thet there's nothing to go on.

As for them proving that the debt is yours for purposes of a Form 1099, I would think they'd need the same things that they'd need if they were trying to collect on it. In your place, I'd open by sending them a strongly-worded DV letter. This one would do nicely. Customize it to fit your situation, and be certain to print out and include the enclosure with it. Send the whole thing to them certified mail, return receipt requested. Then keep the little green card in a safe place, as proof they got the letter.

If they can't validate the debt [they won't], then they can't prove it's yours. If they can't prove it's yours, then they had no business sending that 1099. Give them a couple weeks or so to produce, then contact the IRS about the matter. They take rather a dim view of this sort of thing, if memory serves.

Answers to Unclewulf's questions:

What state do you live in? WA, previously TX
What is the debt for [med bill, credit card, student loan, etc]? Visa credit card
Who is the CA that sent you the 1099? Portfolio has threatened but haven't donme it yetIs this the first CA that's contacted you on this account? First time in many years
When was the last time you made a charge or payment on the account? 1998

thank you

OK, it's like this.....

portfolio recovery associates are junk debt buyers. Scum, basically, and crooked scum at that. They've been doing this 1099c thing for a while now. We discussed it a bit on this thread back in February.

You say that they haven't sent you a 1099c yet... Sounds like they may be using that as a threat, to scare you into paying. How did you find out about it? How did that interchange go?

Regardless, you ought to send them a demand for validation immediately. As in tomorrow. In the morning mail.

Here's that [url=http://www.debtconsolidationcare.com/collection-agencies/better-structure.html]validation letter template link[/url] again, if you need it. Get it in the mail immediately. At best, you'll never hear from them again. At worst, you'll have ammunition available in case they do send you a 1099, or pull some other fast one.

Given the age of the debt and their track record, it's a near certainty that they can't validate this thing. Demanding validation [which they likely can't provide] should give you some leverage with the IRS if they try the 1099 game. It also sets the stage for you to sue the pants off them if they try any of the other sleazy tactics so beloved of bad collectors.

You should think seriously about speaking to the IRS about this. Definitely should, if Portfolio sends you a 1099. When talking to the IRS, make sure to cover these points:

1 - Validation was requested, they didn't validate as required by law.

2 - You have no idea at all if the amount is right or not, or even if it's your account, etc.... [Never admit to owing anything to anybody.]

If you talk to IRS, please let us know what they have to say on the matter. You aren't the only person on this board who's looking at this same scam.

Best of luck. Holler if you need us, we'll be here.

Thank your for the good information and your help. I used the links. If Portfolio sends me a 1099C I will report them to the IRS.
I do not owe Portfolio and will not pay them, nor will I pay tax on any account Portfolio says I have defaulted with them.

Glad we could help.

When they have purchased a debt that old it's very easy to shoot them down. Requesting validation for starters is a great idea because chances are they will not be able to validate. You can also speak to your state Attorney General's office or IRS office to see if they can even file for a debt that is that old and it's hard to tell if anyone else has tried to file for it in the past.

If you need help with requesting validation just let me know and I'll be happy to help you.