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Cincinnaticus last won the day on April 4 2010

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  1. Interesting stuff! I've got to "hit the hay" but I look forward to continuing this discussion with great anticipation. I have some ideas on how to respond to JDB-issued 1099Cs too. Unfortunately, April 15th is fast approaching and Uncle Sam requires his pound of flesh so I might be tied up for the next day or two before I can respond. Best wishes, Cincinnaticus
  2. Portfolio Recovery Associates in Financial Trouble? Here we go again with the Creative Accounting 1099C charge-offs. This time around, it's Portfolio Recovery Associates of Norfolk, Virginia. Is Every 1099C a Potential Lawsuit Against the Collector Issuing It? Just received some interesting information regarding the recent article you ran regarding all those 1099-C's Portfolio Recovery Management has been sending out on time-barred debts they can't collect on: According to the WV General's Office, "In the case of a debt that has been disputed and cannot be proven a 1099c is not a valid option for a CA to file. By filing the 1099c they are saying that yes this is that persons debt and we can prove it is. However if they cannot validate they cannot file the 1099c". ...they suggested the recipient of the 1099-C file a complaint with our State's AG office or file a civil suit or both. (Email - our edits in blue) My mail box has been flooded with consumer complaints from all across America stating they have received IRS Form 1099-Cs from Portfolio Recovery Associates (PRA) on debts they purchased. Many claim these debts date back into the mid 1990s and are no longer on their credit reports; most are past State statutes for taking legal actions and the majority appear to be far beyond the seven year statute for credit bureau reporting. Portfolio Recovery Associates, of Norfolk, VA is a purchaser/seller/collector/ of junk debts purchased in portfolios for pennies on the dollar. Upon purchase, these debts are inflated to where they attempt to collect on them from consumers at very high profit margins. NASDAQ (GS: PRAA) showed Tuesday’s close was 37.34 up from a high of 37.33. We are aware that the junk debt buying industry is upside down right now because prices have skyrocketed with so many players getting involved in the scavenger debt industry. The fact that PRA is flooding consumer mailboxes with 1099-Cs that are 10-12 years old should be a concern to anyone who is involved in this business. The fact that a scavenger, junk debt buyer can pay pennies for an old, worthless debt, then convey to the IRS that they are entitled to a tax break gives former Enron bookkeepers a rush (wish I had thought of that?) with anticipation of what could have been. Think about it. PRA cannot legally collect the alleged debt, because the debt is barred by the statute of limitations. Their philosophy seems to be that if the consumer won’t pay PRA, then the consumer should pay someone-and that someone is the IRS-so PRA can reap the benefit of a tax deduction? The question seems to be whether Creative accounting allows that PRA can deduct the amount of the debt as shown on the 1099-C, and not the pennies on the dollar that they actually paid for the worthless debt. Contact a tax professional for advice and assistance if you receive a 1099-C from PRA. Is Asset Accetance Corporation Involved In An IRS Scam? Asset Acceptance Corporation (AAC) is not new to this game. As bottom-feeder debt collectors they have tried a lot of tricks and scams to separate consumers from their money, among them; changing dates of last activity on credit reports, manufacturing bogus affidavits for court filings, phony pleadings and even reports of phony payments being made on accounts to change the activity dates. This latest apparent scam is new, by any definition and may involve staggering amounts of money. AAC is reportedly buying old, mostly worthless portfolios for pennies on the dollar; They then mark them up at inflated figures, then attempt to collect from unsuspecting consumers. The problem with bottom-feeders such as AAC is they NEVER have anything invested in the accounts, other than the money it took to purchase them. They are NOT creditors, have NEVER extended any goods or services, have no liability for accounts and their assertions of being ‘valid’ claims, and may be nothing more than smoke and mirrors. Their latest attempt appears to not only fleece the American consumer but may be an attempt to scam the IRS. It involves sending out IRS Form 1099-C forms to consumers on accounts they failed to collect. The legal questions to be addressed here include how can you claim something you never had, for services you never performed on accounts that never existed on your books? Our emails state that consumers are receiving IRS Form 1099-C, stating the debt is being forgiven by AAC, but reported to the IRS as income. Income? On what? They did nothing, yet appear to be fleecing both the American consumer and the IRS with these forms that may give them huge tax breaks on their income. Here is what one expert had to say: Great question. Let's take it to its logical, and theoretical, extreme. New company (let's say Exxon-Mobil) buys paper, solely for the purpose of tax write-offs. Buys $1 Billion in bad debt for $50,000, which might be possible, if it is really old debt and even discharged debt (though I don't know if it is legal to 1099-C someone after discharge). Sends out all 1099-C's, does not debt collection at all and applies the $1 Billion to shelter a portion of its $9 Billion windfall, when actually paid only $50,000. I see an audit coming. Think of the accounting entries. Credit Charge off for Bad Debt $999,950,000 Credit Cash $50,000 IRS regulations allow for a Form 1099-C to be issued on accounts that are uncollected, however where does the smoke and mirrors end and reality start on bottom feeders? If you receive a 1099-C form from AAC, you are urged to consult with a professional tax advisor. By law, AAC must show a zero balance on your credit files and of course, cease all collection activity as that account fails to exist once it has been reported to the IRS. Since AAC can apparently deduct these windfalls off their taxes, it makes me VERY happy for the new federal accounting laws that hold them liable for their accounting practices. Congress enacted the Sarbanes-Oxley Act, representing the biggest changes ever, to federal securities laws. It resulted from the large corporate financial scandals involving Enron, WorldCom, Global Crossing and Arthur Andersen. Effective in 2004, all publicly-traded companies are required to submit an annual report of the effectiveness of their internal accounting controls to the SEC. AAC is publicly traded under the symbol of: Nasdaq: AACC. With their recent announcement of record profits, one wonders how far reaching this may go. Is AAC employing ENRON type accounting practices, is what they are doing legal? Anyone receiving an IRS Form 1099-C and thinks it may be bogus is encouraged to file a complaint with the IRS. Perhaps an audit of AAC by the IRS can clarify this new and apparent scam to fleece the IRS as well as the American consumer.
  3. Welcome back! Five years is quite a long hiatus. Please feel free to summarize how you improved your credit score by over 200 points in only 6 months. (Very impressive!) The economy absolutely stinks in my state so I feel your pain. A$$ kicking debt collectors is what we're all about these days. Cincinnaticus
  4. Excellent advice, MG05. Strategic deployment of a JAMS arbitration coupled with the threat of pulling the "nuclear" option [bK7] gives the debtor some serious leverage to negotiate a settlement agreement for pennies on the dollar. Worst case scenario, the debtor still "wins" knowing that he fought the good fight to the bitter end and at great cost to the banksters. Cincinnaticus
  5. Yes, they were issued to me by the original creditors when I settled my accounts for less than the full amount, the difference being considered taxable income. Sub00's post is correct regarding the 1099C in terms of taxable income and the legal means to avoid paying it via the 982 insolvency "loophole" so it's not a big deal, at least for the majority of people. My earlier question regarding the issuance of 1099Cs on debt past the SOL usually applies to Junk Debt Buyers [JDB] and specifically a scurvy outfit known as Portfolio Recovery Associates. Here are a few meaty threads I found which discuss this issue in detail: Portfolio Recovery Associates 1099-C SUCCESS - Against Portfolio Recovery Associates! I don't know if you can force the OC or JDB to issue you a 1099C but, again, I would not worry to much about it unless one happens to be Portfolio Recovery Associates. Cincinnaticus
  6. Keep in mind, having a 1099 is no assurance that one of these things won't pop up years later to haunt you, although you would have a rock-solid affirmative defense in addition to the SOL and grounds to sue them for fraud. If I were you, I wouldn't push the issue. Relax and savor the fact that you are free and clear. After all, you've already beat the bastards and achieved victory without having to litigate the issue. Enjoy! Best wishes, Cincinnaticus
  7. TRU Q: Speaking of suing if someone issued you a 1099 after the debt ran out on SOL (which is what I thought this thread was going to discuss), how would you recommend a consumer go about doing this? What cause of action would you employ? Are you aware of any case law regarding this issue? Also, how would you respond to the IRS with regard to the 1099? It seems like consumer advocates like Bud Hibbs have been unable to come up with a plan to counter the 1099 scam. Thanks! Cincinnaticus
  8. How to Write a Motion to Strike Affidavit of Debt:
  9. Business records are exceptions to the hearsay rule but not an affidavit purporting the records are accurate or alleging the amount the plaintiff is seeking is correct, especially given that the person making the statement is not available to be cross-examined to test the veracity of the statment made in the affidavit. That is why we have depositions -- to depose and cross-examine witnesses! Depostion testimony is not considered hearsay; an affidavit, in most cases, is the very definition of hearsay and is inadmissable. The reason judges permit it is because the vast majority of pro se people don't know to object and even when they are represented by an attorney, the attorneys themselves are either too timid to raise Holy Hell in the court room or are just too plain stupid to object. Also, many judges are simply biased and are counting on the fact that the defendant will not contest his ruling via an appeal. You get around that by always preparing for an appeal by making your record of the objection! Motion to Strike Affidavit on Hearsay: Cincinnaticus
  10. It depends on how much equity you have in them as it relates to the possiblity of you filing a Chapter 7 Bankruptcy, which is the worse case scenero for the bank because they get nothing due to credit card debt being unsecured! With many folks today, there is nothing to lose by discharging an upside-down house in bankruptcy, right? If you have a home you've been paying on for many years with a great deal of equity, the bank will know that you are less likely to file a Chapter 7 and thereby be more intransigent when it comes to settling an account given that they could "collect" via a lawsuit followed by placing a lien on your home. If you were to file a Chapter 13, the bank most likely would receive something back over 5 years, which may be less than what you may be able to offer now as a lump sum payment to settle the matter. As you can see, there are many factors to keep in mind, but also remember that the banks are cash strapped at this time so may be willing to settle for less than what they would usually accept. As willingtocope said, their are many factors to consider but I wouldn't lose too much sleep over it. Hope that helps. Cincinnaticus
  11. Some additional "golden nugget" suggestions, courtesy of TRU Q, taken from the thread entitled "Gonna walk away from upside-down home":
  12. Did you respond in writing to their hardship payment plan? That was the time to drop a "hint" that you are experiencing severe financial difficulties (always use those words which suggest you are "busted bones" and on the edge of bankruptcy) and will not be able to accept their "generous" offer but would possibly consider another arrangement to work things out with the accounts. How long ago was the hardship offer made to you? Keep in mind, it's difficult for me to provide suggestions without some idea regarding your overall financial situation. Do you own a home? Do you have assets that the bank can see on your credit report? All of these things and much more play into each bank's decision whether or not to offer a settlement and for how much. If you need some help drafting a response to their hardship offer, let me know. Cincinnaticus
  13. Don't worry so much about the charge off date. If it passes without a settlement agreement, so be it! When it comes to accepting settlement offers, Discover may be more inclined as the 6 month charge off date arrives but maybe not. Perhaps you can settle with them more easily after charge off. Who knows? Generally speaking, the more time that passes, the more inclined the original creditor is to settle the matter, excluding Capital One of course. The point to understand is that the charge off date is, as willingtocope stated, merely an accounting term, and really isn't an important factor from the standpoint of eventually settling your accounts. QUESTION: Have you made any offers to settle with them? Cincinnaticus
  14. The affidavit is indeed hearsay and you need to make your objection to it on the record. What is hearsay? HEARSAY: Hearsay is an out-of-court statement offered to prove the truth of the matter asserted. If the person who made the statement is in court, subject to being cross-examined by the opposition, then the statement is not hearsay, even though the person who made the statement wasn’t in court at the time the statement was made. The measuring stick is whether the person who made the statement can be called upon to corroborate, or deny, the statement in court and whether that person can be cross-examined to test the truth of what they said in person. If an affidavit is offered to prove the truth of what it says, however, and the person who signed the affidavit under oath is not available to be cross-examined in court, the affidavit is not admissible! The affidavit could be witnessed by the highest authority and still not be admissible unless the person who signed the affidavit can be brought to court where he can be cross-examined as to whether what he said in the affidavit is true. A statement is only inadmissible hearsay if offered by a witness or document to prove the truth of what the absent person allegedly said. If offered for any other reason, it is not hearsay. Cincinnaticus