Debt has been validated. Debt perhaps cancelled will 1099-c be on the way?

[charles_doko]

Recently my medical debt was sold to a collection agency. I requested debt validation, and they produced the documents. I hear that because of recent legislation, debt buyers are required to report forgiven, or cancelled debt to the IRS as taxable income.  It is around 20,000 dollars. Of most likely out of statute debt. The said the debt was cancelled because of the SOL. However, they sent debt validation. Even after they stated the debt was cancelled on the phone.. I am considering filing bankrupty for around 100,000 dollars in medical bills. Now I am worried on this tax liability for forgiven debt might add up to around 7,000 dollars. Do these debt buyers and collection agencies often issue 1099 c's? How worried should I be.

[fisthardcheese]

If you file BK, then add this collector and the OC as a creditor on your BK.  This will wipe out that $20k even if it is SOL.   I am pretty sure this will prevent any 1099 from being issued, as they can't "forgive" a debt that has been discharged in BK.

[WhoCares1000]

Even if a 1099C is issued after a BK, you can file form 982 and report the debt as part of a BK and that removes the tax liability. Most places do not issue a 1099C for a BK debt however.