CISGuy

Q: 1099C & Unreasonable or Illegal Added Interest

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I have a question about this, if you're settling say... and old apartment debit with a CA. This debit is past SOL and you're paying it in order to clear the road for an eventual mortgage. What happens if the CA has tacked on unreasonable or even illegal levels of interest and you settle for nickels on dollars? Would this 1099-C reflect the difference between the original debit or the possible illegal interest?

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On the 1099c form, there are various boxes....one that shows the amount you actually "borrowed" and others that show interest and fees added on.  technically, you only owe taxes on what you borrowed.

 

However, cas and JDBs  often don't bother to follow the rules...you may have some additional paperwork to file.

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On the 1099c form, there are various boxes....one that shows the amount you actually "borrowed" and others that show interest and fees added on.  technically, you only owe taxes on what you borrowed.

 

However, cas and JDBs  often don't bother to follow the rules...you may have some additional paperwork to file.

 

So, long story short... If I have documentation showing my old principal balance then I should hold on to it.

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