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    1099 from collection agency

    I got 1099ed by a debt collector on a ten year old debt, the SL in my state is 6 years
    I have sent them a registered letter asking for all required info , Proof they own the debt, original contract with my signature and the complete payment history from the original creditor. Has anyone else had any experience with this or any other suggestions? I plan to dispute the 1099 if they dont provide the asked for documents.

    #2
    i didn't think they could do that if you didn't agree to a payment plan.

    Comment


      #3
      As far as I know if the debt is 10 years old and the limitations period has expired, the debt can be removed from your credit reports and they can't sue you for it. But for them to issue a 1099 for the charged-off debt so you have to pay income taxes on the charged-off amount, I don't know. I feel for you and wish you the best.

      Comment


        #4
        Originally posted by carlsguide View Post
        As far as I know if the debt is 10 years old and the limitations period has expired, the debt can be removed from your credit reports and they can't sue you for it. But for them to issue a 1099 for the charged-off debt so you have to pay income taxes on the charged-off amount, I don't know. I feel for you and wish you the best.
        My accountant says they can and have been doing this but they do have to provide the documents that I asked them for, and many dont have that detailed of information.

        Comment


          #5
          this might be an interesting read:
          Instructions for Forms 1099-A and 1099-C (2008)

          A debt is canceled on the date an identifiable event occurs. An identifiable event is:

          1. A discharge in bankruptcy under Title 11 of the U.S. Code for business or investment debt (see Exceptions on this page).

          2. A cancellation or extinguishment making the debt unenforceable in a receivership, foreclosure, or similar federal or state court proceeding.

          3. A cancellation or extinguishment when the statute of limitations for collecting the debt expires, or when the statutory period for filing a claim or beginning a deficiency judgment proceeding expires. Expiration of the statute of limitations is an identifiable event only when a debtor's affirmative statute of limitations defense is upheld in a final judgment or decision of a court and the appeal period has expired.

          4. A cancellation or extinguishment when the creditor elects foreclosure remedies that by law end or bar the creditor's right to collect the debt. This event applies to a mortgage lender or holder who is barred by local law from pursuing debt collection after a “power of sale” in the mortgage or deed of trust is exercised.

          5. A cancellation or extinguishment due to a probate or similar proceeding.

          6. A discharge of indebtedness under an agreement between the creditor and the debtor to cancel the debt at less than full consideration.

          7. A discharge of indebtedness because of a decision or a defined policy of the creditor to discontinue collection activity and cancel the debt. A creditor's defined policy can be in writing or an established business practice of the creditor. A creditor's practice to stop collection activity and abandon a debt when a particular nonpayment period expires is a defined policy.

          8. The expiration of nonpayment testing period. This event occurs when the creditor has not received a payment on the debt during the testing period. The testing period is a 36-month period ending on December 31 plus any time when the creditor was precluded from collection activity by a stay in bankruptcy or similar bar under state or local law. The creditor can rebut the occurrence of this identifiable event if:

          a. The creditor (or a third-party collection agency) has engaged in significant bona fide collection activity during the 12-month period ending on December 31 or

          b. Facts and circumstances that exist on January 31 following the end of the 36-month period indicate that the debt was not canceled.


          Significant bona fide collection activity does not include nominal or ministerial collection action, such as an automated mailing. Facts and circumstances indicating that a debt was not canceled include the existence of a lien relating to the debt (up to the value of the security) or the sale or packaging for sale of the debt by the creditor.
          I wonder which one of these is the one that trigger the debt being cancel. 3 and 7 seem most likely. I also wonder if someone can cancel a debt after one of these event have occur.

          I think you are taking the right course of action. if they can't prove they own the debt, how can they cancel it?

          Comment


            #6
            it must be #7 becasue #3 requires that the SL be upheld by a court. which it hasnt.\

            thanks for offering that

            Comment


              #7
              My question would be if they send a 1099-c, then does this mean the debt if completely gone? They can no longer attempt to collect?

              I read an article about this and it pondered how the collection agencies were reporting this to IRS. They buy these debts pennies on the dollar, but yet they are issuing a 1099 for the whole amount owed, so then it looks as if they lost more more than what they ever paid for the debt themselves.

              Comment


                #8
                Originally posted by wnlbutterfly View Post
                My question would be if they send a 1099-c, then does this mean the debt if completely gone? They can no longer attempt to collect?

                I read an article about this and it pondered how the collection agencies were reporting this to IRS. They buy these debts pennies on the dollar, but yet they are issuing a 1099 for the whole amount owed, so then it looks as if they lost more more than what they ever paid for the debt themselves.

                Yes if they forgive the debt then the debt is gone. It has been a few weeks and I havent heard back from them.

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