If a creditor sends you a 1099-C is the debt 'forgiven' and how will it appear on your credit report?
- The debt is forgiven and sooner or later a notice will appear on the CR. This is not a plus for you rating though. Then there is the IRS involvement gains, losses, blah, blah, blah.
- It may not be good for your credit report but it is much better than the overdue debt that you had.
- THE 1099-C IS ANOTHER WAY THE CREDITOR YOU OWE, IS GOING AFTER YOU. YOU ARE REQUIRED TO REPORT THIS UNPAID DEBT AS INCOME ON YOUR FEDERAL TAXES.
- The IRS form 1099 is used by various entities to report income that they have perceived you have earned. Example: Blah Bank issues you a credit card. You run up $2,000 and never pay. After some time Blah Bank will issue a 1099 to you. They are also reporting the $2000 as income you have earned, to the IRS. A 1099 can be a blessing because no one elsae can come after you for the $2,000, the bad side is that now you may have to pay income tax on the $2000.
- The IRS requires financial institutions to report to them the amount of principal they charge-off for individual borrowers. It is only to be filed after you have stopped collection activity and there has been no payment activity on the account for three years. This is not a way for financial institutions to try and collect further. It is an added burden on them to track these conditions and find the records when they meet the criteria for filling. The financial institution had written the debt off years earlier.
- The state law effect of a form 1099-C varies. Connecticut views it as a signed writing that releases the claim, California does not. Kansas views it as having discharged the claim, but the reasoning of the judge in that case was flawed. In any case where a debtor has defenses to assert against a creditor's claim, SOL should be the last one used because its successful use triggers the requirement for the creditor to issue a form 1099-C. If a defense such as lack of documentation is successful, the 1099-C issue is never reached.
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If you're receiving one of these, it is in most cases for one of two reasons (my answers are based on the most common form of consumer debt, credit cards--banks may also issue 1099-c forms for mortgages, defaulted student loans, etc.--I have no idea. My post is about credit cards or other debt not related to education or major purchases that require financing):
1.) You have a debt that was never paid, or partially paid, sold to a collection agency who still couldn't collect, etc. Whatever--point is, whoever owns the debt is writing it off as a loss. This is not very common because unless you file for bankruptcy, most collection agencies or banks won't simply "give up" on you. If anything, they'll file for a judgment against you for the debt, interest, collection costs, capitalization fees, etc. It is very unlikely that you're receiving a 1099-C simply because the bank said "ah, lets write this one off." With the problems lenders are having these days, no bank is going to surrender debt as a loss. or,
2.) You had a collection agency or bank hounding you for money. Hopefully you were smart enough to pay them off with a lump sum instead of making payments that merely cover the interest. Anyway, if you were even smarter, you realized that the principal of the original debt (say it was a $5,000 credit card) was like 33% of the amount they were now demanding, and you cut a "deal" to close the case. Well, say it was a $5,000 credit card, they were demanding $13,500, and you gave them $10,000 to call it even. Well, the difference between the "demand" and your "settlement" is considered taxable income by the government. You have to pay income taxes on that $3,500 that you "gained."
Please note--some exceptions do apply--please refer to IRS form 982 (Google it) because there are ways to avoid paying these taxes. Most commonly, if you were insolvent at the time of the settlement (not bankrupt, insolvent) meaning your current liabilities (loans, debts, bills, etc.) outweighed your assets (income, savings/checking accounts, other assets like house, car etc.) you do not have to pay the tax---the theory being that the debt was written off because you couldn't pay. Now if you are making $200k driving a Lamborghini with a beach house and a loft in Manhattan, this would obviously not apply. This is for the people who don't pay off bills, or negotiate settlements for partial payment to close the case, simply because they cant afford to pay off the whole bill.
P.S. -- When you negotiate to settle an account, you can negotiate for whatever additional terms you want (nobody guarantees you will get those terms, or that those terms will be honored, but you can try). Potentially the settlement agreement could recite that the amount the creditor is claiming is doubtful and disputed an as a result no 1099-C form will be issued. You could also negotiate that the creditor will not communicate further with credit reporting agencies about the account for any reason whatsoever (keep in mind that "pay for delete" where they actually take it off is much more difficult to obtain), a result that leaves you in control of the reporting and doesn't alert other creditors that you are "putting out" ... (and you should wait to dispute the account until all other defaulted accounts are settled or past the statute of limitations). Ideally, you would also negotiate for a liquidated damages clause in case they fail to honor their agreement so there would be no argument over what they would have to pay you if you took them to court, but good luck getting that one.
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Unless the car qualified under the lemon law, YES. Type in "Lemon Law + "your state"in your browser.
Can a debt collector report to a CRA a debt which was never reported by the original creditor of the debt?
The answer to your question is Yes, they can report a debt that was never origionally reported to the CRAs. This is most common with medical expenses. You may have an outstanding debt to a doctor's office for example, and though Doctors do not typically report debts to a CRA, if they sell your outst…anding debt to a collection agency, they absolutly have the right to report it to your credit report. So, in a word, yes, it is legal, and is actually quite common. Hope this helps! In fact it is against the Fair Debt Collection Practices Act for a medical debt to be reported to the credit agency, but it doesn't apply if they sell the debt to a third party collection agency. Nice way for them to get around that. ( Full Answer )
The only way to have an account removed from your credit report is: 1. To prove the account was a result of fraud. Or 2. To let the account run the course which is 7 yrs. from the date it was PAID.
If a debt on your credit report says 'bad debt write off ' can the creditor still sue you or collect the money?
That depends on the type of debt, the age of the debt and the state (if you are in the USA) that you live in. There are statutes of limitations in most states for most debts (excluding taxes, student loans, and child support payments), that run from 3-6 years. Once the statute has run out on the d…ebt, the creditor can no longer legally sue you for the debt. The time frame for the statute begins at the last activity or last payment of the debt. ans The charging or writing off of a debt is only a (required) accounting entry by the creditor. It does not effect you, or change the amount you owe, or that you owe it. It does not change any of the legal methods to force collection that were available before making the entry. All it does is make the creditors accounting statement recognize that an asset (your receivable) that it expected to realize, (and already recorded or "accrued" as income), is not going to happen. They are recording the charge to their books for the expense (or over recording originally) of your not paying what was expected. It says that it is now considered unlikely you will pay, and the asset does not exist (or in bank terms, is no longer productive). It does not mean they won't pursue it...in most cases, because they have an obligation to stockholders and others, they must. If they get paid (anything or all on it), that amount is considered income and booked as a recovery to replace what they took as a a charge in the write off. Reply to If your credit report reports that you have a bad debt write-off, then it means that the original creditor has written off the debt, but they can still sell the rights to the debt to a collection agency and they can contact you and take legal action. ( Full Answer )
Can a collection agency put a delinquent debt on your credit report if it was never reported by the original creditor and the SOL has expired?
Yes they can. The SOL being expired gives you a good basis upon which to dispute the entry and an affirmative defense to a lawsuit; but those won't prevent a collection agency from reporting a bad debt.
Sure, you can sue just about anyone for anything. Whether or not it is worthwhile is another issue. You can sue creditors for any number of things, breach of contract, bait and switch, violation of anti-trust laws, slander, and so on, The thing that creditors fear most... class action suits. Every d…ebtor has the legal right to file such a suit against creditors and CRA's. ( Full Answer )
Does the Federal Consumer Credit Reporting Reform Act keep creditors from refreshing the debt after seven years by selling it to a collection agency?
NO. only the expiration of the SOL. Which is in almost all cases shorter than the seven year CR.
Answer . \nCreditors may report any time there is activity on your account, if a credit report is pulled [for a credit application] or if payments are made late. \n. \nCapital One may report every month whereas a smaller department store card may not report at all. It solely depends on the credi…tor on how often the credit report is updated. ( Full Answer )
What is reflected on your credit report for an unpaid debt after the seven year period...if it's resubmitted AND if it's not pursured by the creditor?
Answer . If it has been more than 7 years, it shouldn't be on your credit rating at all and should not be resubmitted. You should dispute any resubmitted information with the credit bureaus in writing under the Fair Credit Reporting Act.
How do you get creditors to remove debts from adverse accounts on your credit report once they have been paid off?
Answer . \nLook on the back of the credit report. There will be a list called decode information, may be a different name depending on the report. Find the name of the creditor on the list, it may be hard to read but do your best to figure out acronyms and abreviations and sometimes numbers tha…t will match where the information is listed within the report. There will almost always be an address; use this address and write to them requesting what you need to be done. Sometimes there will be a phone number to call and place your request or just inquire. ( Full Answer )
Misrepresenting any form of information in a credit report is incorrect and a crime too. Irrespective of who is misrepresenting the information, doing so is wrong.
Answer . After the discharge, you are entitled under federal law to have the balance of each discharged debt reported as "O". The history of delinquencies can be reported, but the balance must be zero. If it is not so reported, dispute the debt.
If a parent has a credit card debt appearing on a credit report and the child had a CC under the parent is the child responsible for paying for this debt as well?
Children can not be held liable or responsible for contracts of any type and also do not have any ability to get credit or have a credit rating. That is why their CC is in your name and why only you are responsible for paying their CC debt. All that is impacted here is your credit. Answer If the …"child" is over the age of 18 and is a joint account holder and not simply an authorized user then they are responsible for the debt. Additional Information If the parent co-signed for the child's first credit card and now the child is emancipated. That account should be closed and a new account should be opened in the child's name alone. That is the only way to get the parent's name off the account. ( Full Answer )
Can an original creditor have a debt removed from your credit report in exchange for payment even though it is already listed as a collection account?
Answer . It can't be removed from your credit report even if you pay in full. It will say "settled" and paid in full, but the red marks will still show other creditors that you had some trouble with this debt. It will take the full 7 years to clean up.\n. \n. \n. \n . Once again the person wh…o made the report to the credit bureau can have it removed as an invalid or incorrect entry. It also is not always seven years. ( Full Answer )
If the original creditor is not reporting a debt to your credit report but their collection agency is can the original creditor instruct the agency to have the item removed in return for full payment?
Credit Reports Answer . \nYES, THE CREDITOR WILL REQUEST FOR EITHER PARTIAL PAYMENT OR FULL PAYMENT. ASK FOR A LETTER STATING THAT THIS COLLECTION WAS PAID IN FULL AND THAT YOU HAVE A ZERO BALANCE. ALSO; REQUEST THAT THIS LETTER STATES THAT THIS ACCOUNT NEEDS TO BE DELETED IN ERROR, SO THAT YOU …COULD SEND THIS LETTER TO THE BUREAUS AND HAVE THEM DELETE THIS ACCOUNT OFF YOUR CREDIT REPORT AND RAISE YOUR CREDIT RATING. ( Full Answer )
If a debt is reflected on your credit report by a collection agency can the original creditor recall their collection allowing you to dispute the debt with the credit bureaus and have it removed?
Credit Reports Answer . YES, THIS COLLECTION ACCOUNT CAN BE DISPUTED; WHICH MEANS THAT AFTER THIS IS DISPUTED YOU CAN ALSO REQUEST FOR THIS ACCOUNT TO BE REMOVED FOR GOOD WITHOUT HAVING TO WAIT FOR THE SEVEN YEAR PERIOD. THIS WILL ALLOW YOU TO HAVE A CLEAN CREDIT HISTORY WHICH IN TURN INCREASE Y…OUR CREDIT RATING. ( Full Answer )
If a debt has been paid to the original creditor and they recall it from their collection agency will a dispute succeed in having it removed from the credit report?
Answer . Hard to say. Disputing the collection after you pay off the creditor could still come back as 'verified' from the credit bureaus simply because the collection did happen. If the collection agency does not respond to the credit bureau's query, then the entry will be removed.
How do you stop an old creditor from refreshing or reselling a bad debt and thereby making it stay on your credit report beyond the legal seven-year limit?
Answer . \nYou can issue a cease and desist letter to the respective creditor(s) informing them of your rights and if they continue to press the issue of obtaining information to collect a debt you can take action against that agency or law firm retained by the person trying to collect a debt. Go… on sites like Google and type in CEASE and DESIST letters and you can cut and paste some to a word document and word it to your situation and send it to the creditor and trust me it works the calls and correspondence letters will stop altogether because you're informing them that you don't want to work with a collection agency or someone retained to pursuit collection of a debt. You're telling them that you will settle the debt when you are able to. ( Full Answer )
Answer . \nYes, the credit report has no bearing on whether a debt is valid and subject to litigation.
Answer . It should.\n. \n . \n Yes, and the debtor will receive a 1099C from the creditor, the amount shown on the form is considered taxable income under IRS rules and must be reported on the debtor's tax return as such.
Answer . \nYes, if there is a legal contract saying that the money is owed it can be reported to the credit bureau. It is up to them to determine if it falls under American Law.
Answer . \nTricky answer but you should be able to understand. If they did issue a 1099C for the debt, then they shouldn't then try to collect the balance. However, the debt maybe sold to a third party or third tiered debt organization who are generally hardcore and will ground and pound you o…n the phone. This shouldn't happen b\c now you will pay tax on the debt. However, like everything else in life there are always cracks and many of them. It will take 7 years from the time the last payment was made on the debt to be erased from your credit report. Don't worry about lawsuits either, although some states have a noticibly longer "statute of limitations" the only real way for them to sue you is if you are a property owner or have something to be made liquid. Hang in there. ( Full Answer )
Answer . Assuming that you properly listed the debt in your bankruptcy, the creditor should report the balance owed as zero and it should also correct your credit report to show that the debt was discharged in bankruptcy. You should send a certified, return receipt letter (keep a copy) to the cr…edit card company and enclose a copy of your discharge. Demand that they correct this entry on your credit report. If they fail to do so, contact a local bankruptcy attorney for further assistance. Failing to correct a credit report can be a violation of the discharge order and the bankruptcy court could order the creditor to pay you damages if they fail to correct the error.\n. \nYou should also write a dispute to the three credit reporters: Experian, TransUnion and Equifax, and have them insert it in your report, i.e. "This debt was discharged in bankruptcy on _____ (date)." ( Full Answer )
If you are on a debt management program why does it appear as a negative entry on your credit report?
Answer . \nEven though the debtor is making a good faith effort such circumstances are still an indication that the person is not a good credit risk.\n. \nThis is especially true if any of the debtor's accounts were in default before the debt management program was initiated.\n. \nPlease be ad…vised, a debt management program does not legally obligated the creditor. The creditor/lender can still take collection and legal action against the debtor if they so choose. ( Full Answer )
If your original creditor was removed from your credit report can you dispute the collection agencies still showing the debt and have them removed also?
Answer . No, the original crditor was removed because the account was sold to a third party collector.. The entry will remain on the report for the required 7 years from the DLA.. You can dispute the collection agency entries as well. Often times if you have paid the debt, the collection agency… will no longer keep records, thus be unable to prove the debt when you dispute it. They more than likely won't even respond, as they got their money and don't care anymore. ( Full Answer )
Answer . \nYes.\n. \nOnce a contract has been defaulted on, the creditor has no legal obligation to accept any payment other than that which was agreed on in the original contract or subsequent agreement.
If you settled a debt for less than the full amount and received a 1099-C for the rest of the debt how should this appear on your credit report?
Answer . It will show up as a charged off debt for that creditor, but they may sell the debt to another entity and start collections against you for the debt weather you put it on your taxes or not is irrelevant. However, if you do pay the debt later, you can claim the payoff as a writeoff the …same as you did it initially on the taxes but in reverse. Now its a debt if you can claim the debt as a liquidated assest. ( Full Answer )
Answer . They can do a number of things:\n. \nTake you to court and obtain a judgement. Once they have that they can garnish wages or confiscate property to obtain their money. \n. \nMake a negative entry into your credit report, making it more difficult for you to obtain credit for addition…al credit cards as well as home and auto loans. ( Full Answer )
Answer . No. If they are tell them that the debt is paid off, and ask for them to cease any future calls. You might want to check to see if your credit report is updated with this paid status.
Answer . No! You need to be careful if considering paying the collection agency. At that point it will start the 7 years entry. Bad credit remains on a credit report 7 years from the last date of activity, in other words, the date you make a payment. Make sure you negotiate a deletion prior to pa…ying any collection account. Source: Credit Bible by Phil Turner. ( Full Answer )
Procedure For Creditor . Call that creditor and request for them to report your information with all three bureaus. Be aware that not all creditors will do this, but it does not hurt to try.
If original creditor charged off then sold it to a collection agency can they both report the debt where the same debt appears twice on your credit report?
no.This is in violation of The Fair Credit Act and The Fair Debt Collection Act.Report this to the FTC and your state attorney office.then look for a lawyer to sue them.
Credit can report an account 7 years from the last date of payment. This important that you understand, if you want to increase your credit score.. Remember, good credit is history is established with a proven record of making at least the minimum payments on time--by or before the due date, and st…aying within your credit limits.. It is also best to be moderate in all your purchases and resisted the temptation of applying for more credit than you can handle.. Here are the ways you can maintain a good credit history:. 1. OPEN A CHECKING ACCOUNT, A SAVINGS ACCOUNT, OR BOTH. These do not begin your credit file, but may be checked as evidence that you have money and know how to manage it. Cancelled checks can be used to show you pay utility bills or rent regularly, a sign of reliability.. 2. APPLY FOR A DEPARTMENT STORE CREDIT CARD. Repaying credit card bills on time is a plus in credit histories.. 3. GET A SECURED CREDIT CARD. A secured credit card is a bank credit card backed by money you deposit in a bank account. If you don't pay off your credit card bill, the money in your account may be used to cover that debt.. 4. IF YOU'RE TURNED DOWN FOR CREDIT, FIND OUT WHY. It's important to clear up any credit misunderstandings or mistakes, because a bad record can cloud your credit future. Your credit rating is important, so be sure credit bureau records are complete and accurate.. You must have the proper knowledge in handling your credit affairs and need a great reference source e.g. Phil Turner's Book The Credit Bible. Everything You'll Ever Want To Know About Credit. ( Full Answer )
Yes, credit report has nothing to do with Debt collection. What you should be looking for is State Statute of Limitation. Please type it in google and check the law for your state. Thanks!
Just because a debt doesn't show up on your credit report does not mean that you don't have to pay it. Pay what is due and get on with life.
If your debt with a judgment against you has been sold can the judgment still be on your credit report from the original creditor effecting your credit report twice?
No, it's the same account and the new creditor is simply taking over the same rights as the original creditor.
You must pay all of your legitimate debts. A creditor is not required to report a debt to a credit bureau in order to collect the debt you owe.
How can you verify the date of your last transaction if the original creditor does not appear on your credit report?
If this is going through a collection agency you can tell them what you need to verify it was your debt and they have to get it from the original creditor. They have to get you whatever you need to verify it was your debt.
If that is the case then unfortunately you have been a victim of identity theft. You must contact your own bank immediately to notify them of the situation and call the local authorities who will investigate it for you.. It is vital that you act fast.
Credit reports generally tell creditors about your current and past credit history. They include things like the amounts of credit extended, the highest balance that you held, current balances, how long the accounts have been active, if and when you were late on a payment,how late the payment was, e…tc. They can then use this information to determine the risks associated with lending you money. ( Full Answer )
Generally speaking, at some point the creditor is not going to spend the money to keep a deragatory on your credit report. In the case of Bankruptcy it stays on you credit report for 10 yeas. In the case of foreclosure it stays on your credit report for 7 years.
Yes. It says "Account information disputed under Fair Credit Reporting Act" or some variation of that. The dispute doesn't hurt your score, it is your legal right.
Creditors usually send a batch of updates (from all their customers) to the bureaus once a month. The actual date varies by lender so it is best to ask your vendor directly.
The legal answer is that the process of disputing a debt is simple that for disputes. If your only dispute is that you do not want a litigate debt reported on your credit then you would not legally have the grounds for filing any disputes. If however, the debt is genuinely incorrect or not yours; th…en you should be able to google "credit dispute" and find sample letters and instructions on the process of assuring that your credit report contains accurate information. I would avoid any company or service that claims to "fix" your credit, as most of the time its just a scam, and they just send the same letters you can download off the internet for free. ( Full Answer )
(An extension to my original question) My husband has said that there's something in the FACT Act or the FACTA act that states that we can bring a claim against the creditor that still has not changed my credit status to paid on my report, (and sue them?). It was paid Nov 2008 and it still says w…e owe. Furthermore, the original creditor is still reporting as well saying that they have never received confirmation (from the current creditor) that the debt was paid. We have been refused a home loan because of this. . . Is this true? Do we have a case to bring against them? -Ash ( Full Answer )
If it's a personal debt, such as something off the record, ya might want to.
Normally 30 days after it is sent to a collection agency if you don't ask for validation or 180 days which is considered charged off account.
The bad debts probably came from late payments? If so, then the creditor reports that you were late to the credit bureaus. Therefore, it will stick with you for 7 seven years. As a result, you should try to ask the creditor to kindly take off the late payments of your credit report. If not, you can… go directly to the credit bureaus and file a dispute. They have like 45 days more or less to verify. If they can't, they'll release it. I'm actually having a similar problem now because I had a 3 school loans and left the country and late for all 3! now it's on my credit report for 7 years :(.... I'm actually in the same process,.... I'm going to write a letter to the credit asking for forgiveness out of "good will".... Hope this helps. Ciao! ( Full Answer )
When a debt is forgiven (a forgetadebt as you call it), it will be reported to the credit bureaus. But you will have less debt, which is a positive.
If a debt is "forgiven," it is income to the debtor, and a 1099 is issued by the mortgagee or the creditor. You may not have to pay it, even if you don't file bankruptcy, if the debt was a mortgage on your residence.