1099 Credit Card - Taxes

Good info and everyone should take advantage of this. If you are not sure you qualify, it would be worth hiring a CPA. They only charge a few hundred bucks, which could save you thousands.

Folks, this is an easy form to deal with. Of course, the background work to know that you are insolvent can take a little time. It did not for me. The insolvency form is completed at the time of each settlement...one for each 1099/forgiven debt. In my case, my assets were real estate and were underwater at the time of settlement. (and that is why I defaulted on the cc debt and had to settle.)

So, let's say I was underwater $100k on the house at the time of the settlement and had $50k in other assets. That scenario made me insolvent by $50k at the time of settlement. These figures are not really too far off. On the first card I settled, I could use ALL of the balances of the other cards as liabilities so that made me very much insolvent. As I settled more and more debts, I had to look more closely. But in the end, I settled my HELOC last and mortgage debt is dealt with in a different manner (and my final payment will be 2011 so I still have the whole debt until it is paid and settled).

So even though I have some assets, due to the position I was in on the date of each settlement I was able to file insolvency for each. The IRS is welcome to look at my numbers, and they may.

If you use an underwater home as your insolvency tool, just be sure to settle any heloc or mortgage AFTER you settle your other debt. As I stated, there is a special manner taxes are forgiven on mortgage debt that is wiped out. So even though you end up not having the heloc balance that is forgiven as a liability, you DO have it as a liability at the time you settle so you can use it to your advantage in the insolvency equation.

Hello everyone....this is debtor in CA....
what I am wondering is: We settled some of my husband's debt (CC's) under his business .....will we receive a 1099 for our jointly filed taxes?
Also, our house was not "under water" .....we bought in 2002....but we could not sell it in this market (Calif) especially at the time....so will this preclude us from proving insolvency?

Also, do the CCs always send the 1099 forms....I have heard that some do no....or is that wishful thinking on my part....thanks for any help
Hope this makes sense......

Greetings,

Got one eye on the mailbox for the 1099's.

Anyone receive theirs yet?

This is the last part of the journey for me.

Regards,
King "Kash" Jabba Labba

When we settled, we received 1099's from every card where we settled with the OC. If we settled with a CA, we were not 1099'ed. I don't know if this always applies. We were insolvent on all of them; they are dated and you will want to use that date.

We kept a running spreadsheet of our assets and liabilites as we worked through the settling of the cards so when we got the letter, we just referred back to that date so we weren't guessing. That proved to be helpful as we had, halfway through the settlement, a car that was totaled. That changed our assets and liabilities. I am not sure we could have kept all that straight in our head!

Proving insolvency was easy; it's just a form you include with your tax return.

Ahhh, they did not forget.

Got two 1099's from the oc's today.

Onwards to the end!

KJL...they are like Christmas Cards for me. The wife thinks it's money. But actually it is the daily stream of 1099's from all of my benefactors in debt forgiveness. Once again, when I see the amounts forgiven on the 1099's I thank them. And because my home is underwater I am technically insolvent...though things are really starting to look up with no more monthly payments to ALL of America's Largest Banks. Thanks to all who helped me, as well.