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Charge Off Questions


AJ
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If a credit card debt is charged off, does the OC send a 1099c for the charge off amount?

 

If a 1009C is issued for the full amount of the charged off debt, and then a settlement amount is paid, will that change the amount of the 1099c?

 

When a credit card is charged off, and if  a few months later a person is able to settle that debt, can the charge off be removed from your credit report? Can that be negotiated with the OC if they still own the debt? 

 

 

Thanks.

 

 

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If a credit card debt is charged off, does the OC send a 1099c for the charge off amount?

 

If a 1009C is issued for the full amount of the charged off debt, and then a settlement amount is paid, will that change the amount of the 1099c?

 

When a credit card is charged off, and if  a few months later a person is able to settle that debt, can the charge off be removed from your credit report? Can that be negotiated with the OC if they still own the debt? 

 

 

Thanks.

When the bank charges off the debt, it does not mean you are not liable for the debt You  stopped paying and the OC closed the account and charged it off. Usually if they don't sue you  it will end up with a JDB. If you make a settlement with the OC and pay, then yes, they send a 1099 and your credit report will say paid or settled if there is a lawsuit  or settlement in or out of court. Only when you pay or settle is their a 1099 with the bank or OC or a JDB I believe as well.

 

It will stay on your credit report as paid or settled for 7 years. Good luck getting it removed otherwise.

You have to call the OC to request it.They should report as paid, settled

 

Yes, in today's terms you owe taxes  on that 1099 on the paid and settled amount. If no payments or settlements are made, then you do not own anything on the 1099 I believe. I know you don't pay taxes on unpaid or unsettled debt in California. .

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@AJ

 

A creditor can issue a 1099C for the charged-off amount, but not all creditors do so.  Some just don't bother.   I don't know what the result would be if you offered to settle after receiving 1099C.

 

You can negotiate a pay-for-delete with the creditor but not all creditors will agree to delete.  If you were to settle, it will not change the date the entry was originally scheduled to fall off your CR.

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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" now seems to include people to whom the debt is sold.  Creditor still has 3yrs from an "identifiable event" to issue a 1099c.  Charge off is NOT an identifiable event (So, in effect, they can CO...carry it on their books for 3 yrs...then send you a 1099c)  And it does talk about what amount should be reported.

 

The creditor IS required by law to inform the IRS when a debt is canceled.  Some may "conveniently" forget to send you a 1099c, but you are still required to pay the tax. 

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