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Chase 1099C & reporting

Guest mkw8

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I was reading another string from a member who received a 1099-C from Chase but that conversation involved IRS income reporting. My question is regarding how these accounts are reported to the CRA's.


I was issued a 1099-C from Chase clearly stating the debt was forgiven. I reported this on my tax return as per the IRS. Later, when reviewing my credit reports, I noticed that the account is shown as charged off but still with a balance. When I inquired with Chase, they said that they had the right to continue to report the balance regardless of the charge off. 


Can Chase continue to report a balance or should the balance be zero, which is what other lenders have done with whom I've settled?

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I believe the devil is in the details on 1009-C's and credit reporting. Chase was fined by the CFPB and OCC for charging its credit card customers for credit monitoring services their customers never asked for or agreed to, and in many cases never received. In my opinion, this applies to how accounts that were ultimately charged off were reported to the credit bureaus and the amount stated on the 1099-C. For example, let's say Chase charged $12 per month for credit monitoring that its customer never agreed to or received and these charges went on for 36 months. That means Chase charged a customer's account for $432, plus interest. If they reported this extra balance to the credit bureaus (which I can say from personal experience they did), then they violated the FCRA by reporting inaccurate information (and likely violated other sections of the FCRA by failing to provide notice). I also believe Chase's actions to be a pretty despicable fraud, considering they took these illegal actions under the guise of offering credit monitoring services to its customers so they could be alerted to fraudulent activity in their accounts.


Take the same set of facts and apply it to a 1099-C. If Chase charged off a customer's account, and the account included unauthorized charges made by Chase for services never received, then the 1099-C will most likely have an inaccurate amount reported to the IRS. It's illegal to intentionally report false information on a 1099-C to the IRS.


I've read several conflicting court rulings on 1099-C's regarding the ability of a bank to continue collection activity (and by extension credit reporting) post issuance of a 1099-C. In my opinion, a consumer's ability to take action against a bank (regulatory complaint, lawsuit, and/or arbitration) will hinge on any extenuating circumstances, specifically: the bank's inability to properly identify the date and event that triggered the issuance of the 1099-C, inaccurate information reported on the 1099-C or to the credit bureau, or fraud. Please review your statements from Chase to see if they charged you for any services (especially credit monitoring) that you did not authorize or receive, and review if those charges were included in any credit bureau reporting or in the 1099-C amount.


Also, please see these press releases by the CFPB and OCC that detail Chase's actions:





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  • 3 weeks later...

Reply to 'mkw8' :

I too received a 1099-C from Chase. Attached was the following (short version...left out the part of contacting them for any questions):



"We recently cancelled an unpaid debt on your account, and we're required to report the cancellation of any unpaid principal balance to the Internal Revenue Service (IRS) on Form 1099-C for tax year 2014.


As a result, the balance on the form 1099-C will be the PRINCIPAL BALANCE ONLY. It does not include fees or interest.


You will notice a difference between the balance shown on your credit report and the balance on the Form 1099-C. The balance on your credit report is the total account balance. It consist of the principal, interest, and fees. "


What has me really puzzled is:



 1.) the fact that I Can NOT find an ACCOUNT NUMBER on this form (I am having a problem matching the written off account with my credit reports and records....)



  2.) if CHASE only 'cancels' the unpaid PRINCIPLE BALANCE does that mean that they can still go to court for the rest, namely the interest and fees ?


On a correlating side note to this topic.....  I have been sued by DISCOVER (through Zwicker & a$$ (pun intended...)as attorney/debt collector, for $ 4700  and they have the debt on my credit report listed as " Account charged off.  $ 4700  written off" $ 2,073 past due as of Jan 2015" .



DISCOVER, unlike CHASE (who has not sued me... as of yet...) has NOT issued a 1099-C, and I am wondering IF that alone MAY be a reason to ask for dismissal....




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Pretty complicated...


A. Chase.  You will need to report the 1099c amount on your tax forms and either pay the taxes or claim insolvency.  However, that does not mean they can't come after you for both the principle AND interest/fees later on.  Whether or not the principle is ACTUALLY canceled depends on the "code" they used on the 1099.


They don't need an account number on the 1099c.  Match it to whatever Chase account you have on your reports.


B.  Discover. There are many tests the IRS uses to determine when a 1099c needs to be issued.  CO/WO isn't one of them. 

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The 1099C should have a code either 'G' or 'H' if it is a 'G' then conventional wisdom says they have given up and has written the debt off and 'THEY' will no longer try to collect on the debt.   The jury is still out whether they can sell the debt to a CA or not.  Some say yes, some say no.  Some courts have ruled against and some for.  


They can only cancel what the final balance was before any fees or charges.  They usually have 3 years from charge off/write off to send a 1099C.  But that is also an argument you will get, it could come at anytime.  It's up to you to claim on your tax return for the year issued.  I wouldn't recommend ignoring it because it is the IRS you are dealing with and they want a paper trail if you claim insolvency through a 982.  Some say claim the income regardless of whether you get a 1099C or not, I personally am keeping my records, net worth, any correspondence, statements and anything that may have something to do with all my creditors. 


If they use code 'H' then it means they have issued the cancellation but still maintain ownership to either pursue or sell to a CA for further collection processes.  According to the IRS rules pertaining to the issuance, only those that's main business is financial dealings such as finance companies, payday lenders, banks, credit unions are required to file, is anyone else files you can dispute the 1099C with the IRS.  The balances shown on your credit report are usually there for the OC's bookkeeping.  


It seems everyone has their opinion about what to do with a 1099C, call 10 people or businesses and you will get 10 different answers, including the IRS.

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