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Determined1

Reporting on CRA after 1099-C

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Hi,

 

I recently received a 1099-C from a bank. The 1099-C form states a code for the "triggering event" that caused them to issue the form. In this case it is Code G - which is defined as: "Decision or policy to discontinue collection." The form also states "Cancellation of Debt."

 

However, the same creditor also updated the alleged debt on my credit report after issuing the 1099-C. My question is, updating an alleged debt on a credit report has been deemed collection activity by the courts - which is contrary to Code G - Decision or policy to discontinue collection. While I know there are cases of collection attempts after a 1099-C has been issued, for credit reporting purposes, cant they still continue to report while telling the IRS they have made a "Decision or policy to discontinue collection" ?

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It's been a toss up as to what they can and cannot do legally. It's been shown that even after a 1099-C has been issued that a collector will STILL try and collect. Yet, others say they can't! No clear defined court case one way or the other that we can find. So, expect the un-expected.

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Hi Tom,

 

Thanks for your reply. I've found cases online that show some banks have still sued for collection after issuing a 1099-C. From my read of the cases, they did not go too well for the banks, however, they still tried to collect. Part of what I'm trying to flesh out is a strategy, as I recognize there are no perfect answers on this issue. Thought I'd post this strategy on the credit reporting aspect for feedback:

 

1) Bank issues 1099-C with Code G - Decision or policy to discontinue collection.

2) Send a letter to the bank, referencing statutes and case law that shows credit reporting has been deemed collection activity.

3) Request that bank cease and desist from further credit reporting on the matter, consistent with Code G - Decision of policy to discontinue collection.

4) If they choose to ignore and continue to report, file complaint with CPFB and/or pursue litigation for violations of FCRA.

 

Thanks for any feedback or suggestions!

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As TomnTex said, this has yet to be completely decided by the courts...and, I would bet you could also find cases where the bank was not found liable.

 

I would suspect that since a). Banks are not bound by the FDCPA in most states including the "continuing collectoin" prohibition, and 2). they are subject to the FCRA in all states; that as long as their reporting is accurate, they are allowed to at least report tthe account has been either "charged off" or "written off".  They are under no obligation to remove it,  CO and WO are both events and status.  Once an account is given a status, it remains in that status until the creditor reports deferently.

 

Personally, I'd be more concerned with the 1099c and the IRS.  Remember, there is a difference between civil court and tax court.  As far as the tax court is concerned, you owe taxes UNLESS you can prove otherwise...and whether or not its on your CRs has nothing to do with that.

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I agree with Willing on this one. Until it comes to light in a court case and hopefully the debtor wins out, it's going to be a toss up.

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