Chase Account Form 1099-C Cancellation of Debt

[qman09]

I received a Form 1099- Cancellation of Debt. I paid the the tax to the IRS on this account. Chase is still reporting this on EX as a charge off with a recent balance of $7,713. This same account has been deleted by TU and EQ. What is the best way to get this remove from EX? EX keeps confirming that this account has been verified as accurate. Any help will be appreciated.

[Mustard on Fries]

You paid the tax on this debt, not the debt so it is still a charge off. Attack it like you would any other charge off.

 

It can still report for up to 7 years. Regardless of whether or not you paid the IRS. (Or so I have read)

 

I am dealing with this right now. there are quite a few topics here on 1099C.

[bcco]

Before you do a full frontal assault, a number of people have reported deletion success with goodwill letters to Chase. There's a number of threads on that and I wish I'd tried GW before incurring the brain damage of fighting EX and Chase over 611/623. Here's one: http://creditboards.com/forums/index.php?showtopic=492878

[qman09]

Thanks for the responses. It is my understanding that the the 1099-C is a Cancellation of Debt, and as such the balance showing on my credit report should be $0. How do I dispute this with Chase? How can they cancel the debt and write it off and then say you still owe the debt? Please advise.

[cashnocredit]

Thanks for the responses. It is my understanding that the the 1099-C is a Cancellation of Debt, and as such the balance showing on my credit report should be $0. How do I dispute this with Chase? How can they cancel the debt and write it off and then say you still owe the debt? Please advise.

Unfortunately, no, you still owe the debt.

 

The IRS Form is called "Cancellation of Debt" because it is a catchall for debt forgiveness, adjudication that a debt is past a state's SOL, or that whoever currently holds the debt hasn't met the time requirements for actively trying to collect the debt. The latter is almost certainly the reason as it is really rare that a bank just decides to forgive a debt.

[ICANHASMUNY?]

Thanks for the responses. It is my understanding that the the 1099-C is a Cancellation of Debt, and as such the balance showing on my credit report should be $0. How do I dispute this with Chase? How can they cancel the debt and write it off and then say you still owe the debt? Please advise.

 

you're at the intersection of legally owing and credit reporting .

 

I'm surprised that you're not dealing with a JDB over this - chase sold most of their accounts before a few years ago when they ran into trouble with the OCC over false affidavits and records. ( Google "Linda Almonte +chase" )

 

depending on your state laws/ federal district , you may not have to worry about the being sued on a 1099c. ( some folks have been )

 

as far as credit reporting, it was a charge off at some point in time, and the 1099c write off is a different animal than the OCC rule 2000 charge off .

 

there's a case going on in WI that discusses this exactly, has case law cites for the different states that hold a 1099c bars collection, and you can find it on Google Scholar.

 

MENNES v. CAPITAL ONE, NA, Dist. Court, WD Wisconsin 2014

[cashnocredit]

Thanks ICAN. The case has an excellent discussion of this.

 

Here's Crabb's ruling which was converted into a dismissal with prejudice 10/10/14.

http://www.wiwd.uscourts.gov/opinions/pdfs/13-C-822-C-05-05-14.PDF

[ManofB]

This is an interesting topic. Form 1099-C is described as:

 

Form 1099-C, Cancellation of Debt

File this form for each debtor for whom you canceled $600 or more of a debt owed to you if you are an applicable financial entity (see Who Must File in the instructions) and an identifiable event has occurred.

And as far as I know, a 1099 of any type is considered income from the IRS

 

But the opinion stated is that a 1099-C does not cancel debt, which in my mind means there was no actual benefit (income) received, so therefore no taxes should need to be paid. I'm not a lawyer by any means, but this seems like being penalized twice for the same issue, albeit by different methods (credit reporting and paying taxes)

 

Personally, I don't have a horse in a 1099-C race, but this has sparked my interest for sure.

 

Whats to stop a creditor from filing a 1099-C every year until the SOL is up?

[cashnocredit]

This is an interesting topic. Form 1099-C is described as:

 

Form 1099-C, Cancellation of Debt

File this form for each debtor for whom you canceled $600 or more of a debt owed to you if you are an applicable financial entity (see Who Must File in the instructions) and an identifiable event has occurred.

And as far as I know, a 1099 of any type is considered income from the IRS

 

But the opinion stated is that a 1099-C does not cancel debt, which in my mind means there was no actual benefit (income) received, so therefore no taxes should need to be paid. I'm not a lawyer by any means, but this seems like being penalized twice for the same issue, albeit by different methods (credit reporting and paying taxes)

 

Personally, I don't have a horse in a 1099-C race, but this has sparked my interest for sure.

 

Whats to stop a creditor from filing a 1099-C every year until the SOL is up?

 

A creditor can only file one 1099-C. They don't like to file them (creditors get zero benefit from filing 1099-Cs, it's just a legal requirement) but the IRS has become a stickler and has gone after banks and CAs that failed to file them when a triggering event occurred. In most cases this is from an audit that reveals a pile of defaulted debt that hasn't been actively collected on within the IRS's timeframe of a few years. BTW, the IRS defines actively collected as more than perfunctory dunning letters.

 

You are right, it isn't fair. The problem is that the IRS is federal and the laws that apply to debt SOLs are state laws that vary. It's ridiculous but is an example of what happens when state law collides with federal.

[qman09]

Update:

 

This fell off of my reports. Thanks for all the comments.