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If a bank writes off a debt is it still legally collectible?

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Answer

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Wiki User
06/09/2012

If it is designated a charge off the debt is still valid and collectible by any means allowed under state law including a lawsuit against the debtor(s).

If the debt is designated as cancelled or forgiven the debt is not collectible. A cancelled debt is considered taxable income, the debtor will receive a 1099-C and the amount stated must be claimed on the person's IRS tax return.

If the creditor writes off interest on the original amount is this taxable?