browniebrownie141

Chase starts sending 1099C, but can they then sell to JDB and ...

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@thebigjdoe:

 

when you said the 1st was settled for less, did you settle with OC, or JDB? And, the 2nd one you described "ignored"...what exactly do you mean?

 

And @ willingotcope/ GDaymateAZ & daxbr:

 

that's exactly what I am talking about....the whole has been a "double edge sword" coming from OC and JDB.

 

OC took charge, claiming the tax deduction, issues 1099. We got the 1099 either to show "insolvent or pay tax", suppose the end of it, BUT NO...; JDB jumps IN, filing lawsuit using the same credit card debt and in issed 2nd 1099 WOW....( refering to the article at the first page)

 

This is the reason, why I really want to see how other members, especially Consumer Attorneys here with this forum, what do they make out of the whole thing ?? .....

 

Are these gounds for mutli States class action lawsuit Vs JDBs ??

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@thebigjdoe:

 

when you said the 1st was settled for less, did you settle with OC, or JDB? And, the 2nd one you described "ignored"...what exactly do you mean?

 

And @ willingotcope/ GDaymateAZ & daxbr:

 

that's exactly what I am talking about....the whole has been a "double edge sword" coming from OC and JDB.

 

OC took charge, claiming the tax deduction, issues 1099. We got the 1099 either to show "insolvent or pay tax", suppose the end of it, BUT NO...; JDB jumps IN, filing lawsuit using the same credit card debt and in issed 2nd 1099 WOW....( refering to the article at the first page)

 

This is the reason, why I really want to see how other members, especially Consumer Attorneys here with this forum, what do they make out of the whole thing ?? .....

 

Are these gounds for mutli States class action lawsuit Vs JDBs ??

Yes, 1st was settled for less with the OC directly.  It was charged off after 180 days late but never sold, and various CAs were attempting to collect on behalf of chase.  Eventually it was Chase, and not any of the various CAs, that I settled with.

 

The second one being "ignored" means that basically from the time I was 30 day late on payment, up until this point I have ignored everything relating to that card, other than a call to chase to find out status for a possible settlement, which I never followed up on.

 

I truely believe that they are washing their hands of unpaid charge-offs, considering them forgiven, and 1099c everyone.  I cannot image they would try to later sell any of these accounts that they 1099c'd for

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In fighting an OC/JDB in a lawsuit they have to prove "the elements" of their claim.  What if the amount on the 1099-C is inaccurate, or you don't in fact owe the debt at all (wrong person, you paid it off, etc)?

Is there a dispute process?

Do we just file taxes and ignore the 1099-C and give your explanations to the IRS if they ask about it?

If we simply tell the IRS it's a bogus debt (or ignore it in our returns), is that the end or will there be a hearing and the issuer of the 1099-C will have to appear and show proof?

Since there is a possible crime involved (income tax evasion), if there is a hearing, what is the standard of proof (reasonable doubt, preponderance of evidence, etc)?

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@Harry Seaward  Admittedly, this was several years ago when the 1099c thing first started...but if you browse back thru DocDon's (or was it DiveMedic?) posts you'll see where he successfully fought a claim by a creditor proving that the debt was not his.  The creditor issued him a 1099c.  The tax courts held that he was liable for the taxes.

 

IMO...civil courts and tax courts may come to differing conclusions.  

 

The safest route for a bogus 1099c would probably be the insolvency gambit.

 

ETA:  There has been some recent discussion about JDBs issuing 1099c's.  They are actually committing tax fraud by claiming the full amount as a loss on their taxes when their "investment" is nowhere near that.  A debtor may be entitled to the "whistle blower" reward for turning them in to the IRS.

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The safest route for a bogus 1099c would probably be the insolvency gambit.

 

 

I agree. From what I've seen it's the ONLY route.

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i got the 2nd letter after the 1099 letter and the 2nd letter states the debt is cancelled, so what I think that means is that your off the hook they are not persuing it, its like better than write off, charge off? Is it like stating paid and your done so  the 1099 means that you owe the IRS when you pay off a debt for example to a JDB as it stupidly shows as income in the IRS's eyes? shows as paid- cancelled and no charge off so it would improve credit score?

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i got the 2nd letter after the 1099 letter and the 2nd letter states the debt is cancelled, so what I think that means is that your off the hook they are not persuing it, its like better than write off, charge off? Is it like stating paid and your done so  the 1099 means that you owe the IRS when you pay off a debt for example to a JDB as it stupidly shows as income in the IRS's eyes? shows as paid- cancelled and no charge off so it would improve credit score?

The debt is cancelled so you are off the hook in as far as you don't have to pay anyone for the balance of the debt. As far as the IRS is concerned it was an income for you, so you have to pay tax on it (unless you are insolvent) otherwise it's "unjust enrichment". The IRS may consider it unjust enrichment either way, but it is not too concerned whether or not anyone disputes the alleged debts.

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Yeah, I definitely would NOT ignore the 1099-C on your tax returns, because the FedGov has received copies of them as well.  Unfortunately, the the Federal Government does not care if you dispute an alleged debt.  You're going to pay the tax on the forgiven income.  You can take it into Tax Court if you wish and you're going to have to prove that the 1099-C is bogus, not the issuer of the 1099, but I think you'd probably lose there too.

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Yeah, I definitely would NOT ignore the 1099-C on your tax returns, because the FedGov has received copies of them as well.  Unfortunately, the the Federal Government does not care if you dispute an alleged debt.  You're going to pay the tax on the forgiven income.  You can take it into Tax Court if you wish and you're going to have to prove that the 1099-C is bogus, not the issuer of the 1099, but I think you'd probably lose there too.

Thank you. There are some serious advantages to deadbeat status:

http://www.irs.gov/pub/irs-pdf/f982.pdf

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@daxbr:

 

Thanks for the pdf form 982, I am sure many people who take a look at this posting, will found very useful the form you provided.

 

Again, what you encounter, is exactly  and the reason why I started this posting....

 

And my concern is:

 

Not only now they are double edge "sword",....Suppose we fight the lawsuit Vs JDB, can we still use affirmative defense-Lack of Privity/ Lack of Legal Standing ?

 

( if we show them the 1099, and do what we need with the IRS, that means we acknowledge the debt to JDBs? ; if we don't not only we will spend countless hours to deal with the lawsuit, plus, a RISK we may lose in court !? )

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@browniebrownie141  ...you fight the JDB on the basis of do you owe THEM money...not on the basis of did you owe somebody else.

 

Therefore, yes...all the normal JDBs arguments apply.

 

A 1099c from the OC has no bearing on this case (and, showing it to the JDB will not make them go away).

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@willingtocope:

 

I totally understood what you are saying,....if you take a look at the articles at the front page of this posting, from the magazine....

 

I guess, what I am trying to say is: the judge ruling was that,...as the OC took the loss, issued the 1099, suppose to be the end as far as the debt/ collection goes,.... ( except WE need to deal with the 1099 with IRS.)

 

BUT in reality, it is NOT....

 

This is why I want to confirm with anyone, or attorney(s),...if showing the 1099, would it be a solid reason to kick the lawsuit at the start? Can it be used for motion to dismiss/ or MSJ as the credit card/ or any loans related to that 1099 is simply cancelled, discharge/ write off ??  

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There is this case: Federal Deposit Insurance Corp. v. Cashion (4th Cir) http://www.ca4.uscourts.gov/Opinions/Published/121588.P.pdf

 

It basically says that a 1099-C alone wasn't evidence of a debt being discharged by a lender because it is a means of meeting a reporting obligation to the IRS.

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@Spikey

 

Good find.  They note that a few lower courts have ruled that an issuance of a 1099-C makes it unfair to pursue a debtor for a debt. 

 

"A small minority of the lower courts have held, as Cashion urges us to do here, that filing a Form 1099-C with the IRS constitutes prima facie evidence of an intent to discharge a loan, at which point the burden of persuasion shifts to the creditor to proffer evidence that it was filed by mistake or pursuant to another triggering event in the regulations. See, e.g., In re Welsh, No. 06-10831ELF, 2006 WL 3859233 (Bankr.E.D.Pa. Oct. 27, 2006) (unpublished); Amtrust Bank v. Fossett, 223 Ariz. 438, 224 P.3d 935, 936-38 (Ariz.Ct. App.2009); Franklin Credit Mgmt. Corp. v. Nicholas, 73 Conn.App. 830, 812 A.2d 51, 58-60 (2002). These courts have generally noted that because filing a Form 1099-C has legal significance to the debtor's income tax liability, and because the debtor faces penalties or fines for failing to comply with the obligations imposed, it would be inequitable to permit a creditor to collect the debt after having received the benefit of the "charge-off" of the debt from filing the Form 1099-C."

 

But the 4th Circuit doesn't agree:

"Tracking the plain language of the regulation, a creditor may be obligated to file a Form 1099-C even though an actual discharge of indebtedness has not yet occurred or is not contemplated."

 

"Moreover, because a creditor can be required to file a Form 1099-C even where a debt has not been cancelled, the mere fact that a Form 1099-C is filed does not constitute sufficient evidence, standing alone, that a debt has been cancelled. Without more, it is impossible for a court to know what the existence of a filed Form 1099-C means. It may mean the debt has been discharged; it may mean the creditor intended to discharge the debt in the future; or it may mean that another of the "identifiable events" in the regulation occurred apart from an actual discharge."

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What you want to do is save the letter from Chase. In the second paragraph it states in bold type, "We will no longer attempt to collect the unpaid debt on your account." If the debt is later sold to a JDB and they try to collect, you have evidence showing that Chase explicitly stated they would no longer attempt to collect the debt. When an OC assigns a debt to a JDB, the law generally holds that the JDB fills the shoes of the OC. The OC has said in writing that they will no longer attempt to collect and have also issued a 1099-C Cancellation of Debt. Those two documents together should be enough to defeat any attempt by a JDB to later try to collect.

 

The 4th Circuit ruling isn't at all straightforward in addressing the issue as they did. I suppose a OC could send you a 1099-C and still attempt to collect on the debt or claim that it "intends" to cancel the debt at some future date. However, if a 1099-C has been issued but the debt has not actually been cancelled, then it's not taxable income per the IRS: "If you receive a Form 1099-C but the creditor is continuing to try to collect the debt, the creditor may not have canceled the debt. You should verify with the creditor your specific situation; you might not have cancellation of debt or taxable income."

 

That's just my 2 cents.

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http://www.forbes.com/sites/peterjreilly/2012/06/09/tax-court-rules-1099-c-from-portfolio-recovery-associates-not-valid-for-year-issued/

 

the 2nd article, talks about Portfolio Recovery Associates clearly issued 1099C on the debt that way past SOL....can't believe they did that !!

 

People would have to fight at Tax Court ....OMG

Hi ,

 

Newbie here,

 

I. Can't any creditor who legitimatly ownes the debt ( as if any jdb can prove that...lol  oops sorry) go ahead and file the 1099c even if the debt is SOL?

 

2.  Quoting the writer of the article.."There is a 36 month testing period after the last payment. "

                 What is this 36 month rule.. what does it refer to , and how is it relevant?

 

Thank you

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@Bobbilly

 

The IRs has been playing with the rules again...see www.irs.gov/pub/irs-prior/i1099ac--2014.pdf

 

See the section entitled "When a Debt is Canceled".

 

Couple things to note:

 

Creditor still has 3yrs from an "identifiable event" to issue a 1099c. 

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