FaithNGrace Posted December 5, 2004 Report Posted December 5, 2004 Several years back I worked as a marketer for a fairly successful “Debt Settlement - Negotiated Settlement Company” and one of the objections I ran into frequently was regarding the taxation and 1099 that a successful settlement would bring the client.Our training stated we provided a waiver to the creditor that as a condition of acceptance they sign.Obviously, I no longer work in this field and having never thought I'd need this info. Well I do know. Where can I find a sound copy of such?????Blessing to All!
Carlos Posted December 5, 2004 Report Posted December 5, 2004 As a tangent question to the 1099how exactly do these work?I have heard that $600.00 is the magic number. Could I settle with two OC/CA for 599.99 each or would settling for 300.01 from each of two creditor cause me to need a 1099.the amounts listed are the amount the creditor reduces the debt.
itsgettingbetter Posted December 5, 2004 Report Posted December 5, 2004 Filing the taxes may be advantageous for you--it depends on your situation. An original creditor can either write off the unpaid amount OR sell it to a CA for collection. So--if you settle a 2000 debt for 500 dollars--you will either have a 1099 for the "forgiven" 1500 dollars OR you will have a CA hounding you for the 1500 dollars (and they will also be on your CR's. When I settled a few debts this year, I INSISTED on getting the 1099's--because I know that legally that means the debt is completely taken care of. There is no need to pay taxes on the "forgiven" amount--as long as your asssets are not that much. I intend to file that I was insolvent--and I am not going to have to pay a penny on over 22,000 dollars of "forgiven" debt. This is enough money that I did not want CA's coming after me, people trying to get judgments etc. It can be well worth it to FILE the tax paperwork and have the whole thing over (especially if you can claim insolvency--you will not have to pay ONE PENNY).In answer to the second question--if any creditor a "forgives" 599 dollars--they do not file any tax info on the transaction. So the IRS will not be informed of the amount forgiven--even if a dozen companies "forgave" the creditor of $599. So--in this case no paperwork would need to be filed.
Vderon Posted January 6, 2005 Report Posted January 6, 2005 When you say your assetts were not that much, what did you include? For example, do you include the total value of your home, or just the equity? What your car is worth blue book? I am trying to determine if I could possibly claim insolvency. I just settled an account and will get a 1099 for around 20k.
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