Please look over this settlement letter from Cap1...Comments is needed

[abby24]

Dear Ms. XXXX,

In response to your letter dated March 20, our client is willing to accept your settlement offer of $500.00 on the condition that the $500.00 is paid in 19 month installment.

As for your proposal to remove all reference to the account from all credit reporting agencies, my client is willing to report the account as "settled" once all payment post and clear. While Crap1 agrees not to sell any of the collection rights to this account.

Crap1 will not agree to delete the tradeline or suppress the 1099 tax form

Should you not accept these above terms by april 20 and should you decline to proceed with arbitration, the above settlement terms will no longer be acceptable with my client. My client will instead vigorously seek the total amount rightfully owing to them, in addition to court costs,process server fees and mileage, interest as allowed by law, and attoney's fees.

Should you have any questions please do not hesitate to contact me.

Any comments? Should I be worried about 1099 tax form?

[jkg3]

Do you have, or can you get the $500? If so, pay it in full and sign the agreement. Only pay with a money order. Don't give them your bank account number.

Do not enter into a payment plan with them. They will screw you at some point over the 19 months, and end up suing you anyway.

Or, you can just go with arbitration, and cost them $5,000 to collect their $1,500 (or whatever they say you owe).

[SeaStriper]

Arbitration = Settle at that point 500 plus deletion easily. If it were me I would wipe my a$$ with there proposal... But thats only me...

[trueq]

to pay their $3000 in JAMS arbitration fees, which you cannot recover under the arbitration clause language.

Reiterate your original offer and demand no 1099 and immediate deletion.

Tell them if you get those 2 things you will pay the $500 over 10 months instead. (providing you can do that.)

[sub00]

Reiterate your original offer and demand no 1099 and immediate deletion.

I would not demand "no 1099" trueq.

Since Cap1 is required by the law to report the "canceled debt >= $600" to IRS on 1099-C a creative lawyer can use it to screw him big time.

Furthermore, we must report any "canceled debt" to IRS even in absence of the 1099-C so the issue of the 1099-C is moot.

However, I would request additional payment for estimated taxes [% in my tax bracket] on the amount of the [canceled debt] as a part of my settlement.

[SeaStriper]

As a "disputed debt" does not have to be reported to IRS by a creditor so it is doable. If you make enough $$$ where it will be an issue, then push it as disputed. If you are un-employed don't sweat the 1099. Just how important it is; is up to you.

[DFS]

I have a debt in dispute with bank over the amount owed. Instead of trying to resolve it, they just sent IRS 1099-C, and they conveniently did not send me a copy. I have written to IRS, but I will not make a big issue of it. If they respond back saying Pay - this person is going to pay, whether it is "right" or not. One concern is that the bank might decide to sue or sell the debt (which according to an attorney they can still do). In that case it's off to arbitration. It's a game they play.

[sub00]

As a "disputed debt" does not have to be reported to IRS by a creditor so it is doable.

Without a written statement, in the settlement agreement, that there is no "canceled debt" the concept of "disputed debt" is non existent within the IRS.

Without a written clause in a settlement agreement the IRS will convert your "disputed debt" to a mortgage for timeshare in the gated community.

Caveat: Many lawyers get charged with the extortion while presenting a settlement agreement for their clients.

I would never raised this issue of 1099-C with Cap1 because there are better ways how to avoid taxation of the "canceled debt". For example, filing the 982 form is much safer way since you do not have to submit any worksheet in writing to the IRS on how you arrived to your insolvency.

Edited April 17, 2010 by sub00

[jkg3]

Far too much is being made of the 1099 issue, in my opinion.

If you file the 982, the problem goes away.

Besides, I settled a few debts last year and never received a 1099. Even though the creditor told me it was possible, it didn't happen.

Don't let the 1099 stand in the way of a settlement, use it as leverage. If they refuse not to issue the 1099, demand they agree to delete from the credit bureaus. The 1099 is more valuable to them than dinging your credit report.

Edited April 17, 2010 by jkg3

[SeaStriper]

Your both absolutely right, 1099 is way over-rated - but the point I was trying to make is and I think trueq was saying - they tell you they can't but we know they can. I have yet to recieve a 1099 just the fact a 1099 can lead to legal trouble also for a creditor. Many angles, your call really

[abby24]

As a "disputed debt" does not have to be reported to IRS by a creditor so it is doable. If you make enough $$$ where it will be an issue, then push it as disputed. If you are un-employed don't sweat the 1099. Just how important it is; is up to you.

When you say "push it as disputed" do you mean with Crap1, the lawyers or to the IRS when I do get a 1099 c form?

[SeaStriper]

Lit Spec for Crappy will call/fedex communication depending on C & D status. When and if you make a deal with them (the devil) thats when you stipulate your demands (nicely of course). It will be up to you to decide how far to push, push to far though they will wait for another day... Good Luck

1099 can be sent anytime but usually when w-2 comes out in January, just in time for uncle sammy...

Edited April 17, 2010 by SeaStriper

[bevj2]

Do you have, or can you get the $500? If so, pay it in full and sign the agreement. Only pay with a money order. Don't give them your bank account number.

Do not enter into a payment plan with them. They will screw you at some point over the 19 months, and end up suing you anyway.

Or, you can just go with arbitration, and cost them $5,000 to collect their $1,500 (or whatever they say you owe).

jkg3, why do you advise not to enter into a payment agreement with them? If the terms are specific, and are in a written agreement, what's the harm? I am about to enter into a payment agreement for a settlement offer, and it is written in black and white the settlement amount, and that no extra interest/fees will be charged, and once the amount is paid, the account will be zeroed out (paid in full). Just curious...

[sub00]

jkg3, why do you advise not to enter into a payment agreement with them? If the terms are specific, and are in a written agreement, what's the harm? I am about to enter into a payment agreement for a settlement offer, and it is written in black and white the settlement amount, and that no extra interest/fees will be charged, and once the amount is paid, the account will be zeroed out (paid in full). Just curious...

Because they will usually misplace your last payment which will void and null your agreement with them.

[jkg3]

jkg3, why do you advise not to enter into a payment agreement with them? If the terms are specific, and are in a written agreement, what's the harm? I am about to enter into a payment agreement for a settlement offer, and it is written in black and white the settlement amount, and that no extra interest/fees will be charged, and once the amount is paid, the account will be zeroed out (paid in full). Just curious...

sub00 nailed it.

Cap1 or their attorney will look for a loophole to cause you to break the settlement agreement. These people are snakes. Do not trust them.

If you decide to make the payments, send every payment early, with certified/return receipt mail. Watch to see that the payment has cleared. If it doesn't, send another before the due date.

Consider this - if you do make all the payments on time, but Cap1's attorney tells you that you forgot to make one of them on time, and then sues you anyway, what are you going to be able to do about it?

Cap1 and their attorney know you are broke, and they will take advantage of you and get a judgment that allows them to garnish your wages or take your bank account.

[Bradly1]

To be honest, 1099 does not matter one way or another if the debt is small enough 600 extra taxable income is not going to affect much. I personally think its a non-issue and its something you can give them in-order to try and get the paid for delete-which is much more benificial.

I would shoot for no 1099 if the debt is significant enough to warrant such a request.

I took a settlment with a 1099 for about 1k forgiven and thats nothing. it will affect my taxes for an extra 20+ Dollars so I gave them that for the Negative Trade line Deletion.

Lets not give bad advice lol small amounts = who gives a crap its a toss away.

Payment plan is not really bad, however, YOU MUST GET A SECOND CHANCE put into the agreement. This is were if you miss a payment they must inform you then give you 5-10days however much you can negotiate to clear up the non-payment issue. Without this notice of payment missed and second chance to cure then it will lead you to a possible missed payment and they will screw you if they can. Once you start paying they have you by the short hairs. Your SOL is refreshed they have documentation of payments etc etc.

Payment upfront in advance is best, however, payment plan requires you negoatiate the above mentioned to protect yourself.

Edited April 18, 2010 by Bradly1

[SeaStriper]

Who is giving advice Bradly? My take is everyone has an OPINION, board members should just absorb everyones opinion and act in the best interest of themselves

[abby24]

So 1099 does not matter if it's a small amount, However the amount they are suing me for is $4,000. Do I still need to be worried about 1099?

[SeaStriper]

Most of us would not worry about it abby. Most of the time they forget about it anyway. It does not mean you can't try to push the issue. But if you were to fold on the issue ---> No real loss

[sub00]

So 1099 does not matter if it's a small amount, However the amount they are suing me for is $4,000. Do I still need to be worried about 1099?

Remember that if you forget to include 1099-C income in your 1040 the worse outcome will be that you get friendly letter from the IRS stating that you have forgot to include your 1099-C and that they did it for you and that you own them extra taxes.

In that letter they will show how to appeal.

[sub00]

Payment plan is not really bad, however, YOU MUST GET A SECOND CHANCE put into the agreement. This is were if you miss a payment they must inform you then give you 5-10days however much you can negotiate to clear up the non-payment issue.

Wrong!

Murphy's law: "Anything that can go wrong will go wrong".