After the 1099-C

[Ardellw]

I got a 1099-C from an OC for a car repo. I filed it and paid the taxes on it. The OC is still reporting a balance on my credit report. Since it counted as income and I paid taxes on it, shouldn't the balances say 0? After i disputed it on my credit report, i got a letter from the OC saying the information they were reporting is correct.

Does anyone what happens after a 1099-C?

[Robert Nashville/Savannah]

I think issues like this are unresolved...I've read opinions about such things that support both sides of the issue.

As far as I've been able to gather, that fact that a 1099 triggering event has happened does not mean the debt is no longer owed and/or can no longer be collected down the road...as such, unless or until the OC sells the debt, they would be within their rights to report the "balance" still owing - if at some later time part or all of the debt is collected than I would expect that a new/corrected 1099 would have to be issued which would ultimately reduce your taxes.

If there is a lot of money involved, I'd suggest you check with a CAP or a Tax attorney for their opinion.

[docniss]

I do not believe Mr Nashville is correct on this. A 1099-C is a cancellation of debt. Once the creditor has issued this document they have taken it as a loss on their tax return and therefore cannot collect on it, that is double dipping.

I use 1099-C's frequently in my small business, it is easier especially for small amounts owed. IF I have a client that owes me $100,

I have to pay $92 for small claims fees and then show up to court at least twice this costs me time and money. Then I have to keep going to court every time the defendant misses a payment to bring the defendant back to court or to file for the bench warrant. Depending on the person I enjoy this, but I have been on both ends of the collection issue and I do my best to treat my non paying clients as I would want to be treated. Filing a 1099-C is often the best, filing a lawsuit is public records so not only is the person being sued made public, but my business name is also made public. It is bad for business if the community sees that you are constantly suing someone. My businesses are in towns of 6k and 12k population

I also used a 1099-C with some guys I invested money with on a real estate deal that went bad. The "flip" took almost 2 years to re-coup my money and then I lost $5k. Before they would pay me they tried and threatened to get me to sign an agreement that I would not sue them for the balance. I refused to sign anything giving up my rights. REality is that I knew thay had no cash or investments left but I wanted to leave the option only. I knew at the time they made this request that I ws going to 1099-C them and re-coup part of my money on my tax return. It worked.

And, according to my CPA who is also a tax attorney, I must stop any collection efforts once a 1099-C has been filed with the IRS.

[Robert Nashville/Savannah]

Actually, to the best of my knowledge, there is nothing in the IRS regulations that specifically deal with the issue of whether "forgiven" on which a 1099 has been issued is always and forever noncollectable in the future.

This is also an area where questions will be answered and arrived at through the courts and that process is very much ongoing...I would suggest that it's a bit dangerous to be overly emphatic that a forgiven debt is henceforth noncollectable.

I can also almost guarantee you that years down the road, JDBs will be trying to collect these "forgiven" debts regardless of what the law might have to say about it.

As a starting point, you might want to do some reading here: http://www.irs.gov/instructions/i1099ac/ar02.html#d0e261