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1099-C form from CA

tnphelps

By tnphelps
in Credit Forum

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The last post in this topic was posted 7563 days ago. 

 

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tnphelps

tnphelps

Posted
Posted

My Best Buy and Comp USA Household Retail Services accounts were purchased by Houston Funding Corporation last year. The letter said they had purchased the account and now own it... Also it said this is an attempt to collect a debt by a debt collector.

 

They offered an excellent settlement and I accepted and the account was settled...Now I recieve 2 1099-c forms in the mail from Houston Funding Corp....

 

I thought I read on here that only the original creditor (in my case Household Reatil Svcs) can send out these forms and not a collection agency..So if this is true how do I proceed? They have sent (wrongfully?) the forms to the IRS so as of now I have to pay tax on the forgiven debt.

 

 

Please Advise...

 

Thank You,

 

Tnphelps


tnphelps

tnphelps

Posted
  • Author
Posted
Maybe this will help:

http://creditboards.com/forums/index.php?s...16entry938816

 

 

Is Houston Funding a JDB? Did they purchase the account before it was CO, or after?

 

 

Thanks for the link...I have seen that..Thats where I read that it has to be the OC that sends the forms out..

 

Sorry I am new here and do not know what JDB means..I assume CO means charge off..I looked in the newbie section and couldn't find any abbreviation help..I tried...

 

All I know is that purchased the account from Household and the letter said the now own the account...

 

Tnphelps

IDare

IDare

Posted
Posted

Maybe this will help:

http://creditboards.com/forums/index.php?s...16entry938816

 

 

Is Houston Funding a JDB? Did they purchase the account before it was CO, or after?

 

 

Thanks for the link...I have seen that..Thats where I read that it has to be the OC that sends the forms out..

 

Sorry I am new here and do not know what JDB means..I assume CO means charge off..I looked in the newbie section and couldn't find any abbreviation help..I tried...

 

All I know is that purchased the account from Household and the letter said the now own the account...

 

Tnphelps

 

:) That's ok, you'll pick up the lingo as you go along. JDB means "junk debt buyer" aka "debt purchaser". These are companies that purchase debts in default (usually for just a few pennies on the dollar) and keep whatever money they can collect on them for themselvees. Is Houston Funding identifying itself as a debt collector on their letters to you?

tnphelps

tnphelps

Posted
  • Author
Posted

Maybe this will help:

http://creditboards.com/forums/index.php?s...16entry938816

 

 

Is Houston Funding a JDB? Did they purchase the account before it was CO, or after?

 

 

Thanks for the link...I have seen that..Thats where I read that it has to be the OC that sends the forms out..

 

Sorry I am new here and do not know what JDB means..I assume CO means charge off..I looked in the newbie section and couldn't find any abbreviation help..I tried...

 

All I know is that purchased the account from Household and the letter said the now own the account...

 

Tnphelps

 

:) That's ok, you'll pick up the lingo as you go along. JDB means "junk debt buyer" aka "debt purchaser". These are companies that purchase debts in default (usually for just a few pennies on the dollar) and keep whatever money they can collect on them for themselvees. Is Houston Funding identifying itself as a debt collector on their letters to you?

 

Yes the letter said "This is an attempt to collect a debt by a debt collector".

 

tnphelps

tnphelps

tnphelps

Posted
  • Author
Posted

Maybe this will help:

http://creditboards.com/forums/index.php?s...16entry938816

 

 

Is Houston Funding a JDB? Did they purchase the account before it was CO, or after?

 

 

Thanks for the link...I have seen that..Thats where I read that it has to be the OC that sends the forms out..

 

Sorry I am new here and do not know what JDB means..I assume CO means charge off..I looked in the newbie section and couldn't find any abbreviation help..I tried...

 

All I know is that purchased the account from Household and the letter said the now own the account...

 

Tnphelps

 

:) That's ok, you'll pick up the lingo as you go along. JDB means "junk debt buyer" aka "debt purchaser". These are companies that purchase debts in default (usually for just a few pennies on the dollar) and keep whatever money they can collect on them for themselvees. Is Houston Funding identifying itself as a debt collector on their letters to you?

 

Yes the letter said "This is an attempt to collect a debt by a debt collector".

 

tnphelps

 

From this link it appears that they are a JDB...

 

http://www.reliabilitymall.com/members/hou...undingcorp.html

Satchel

Satchel

Posted
Posted

It is my understanding that a collector can issue a 1099c only if they paid the full amount of the debt's value, which most only pay pennies on the dollar. But you should ask a professional about this, or even ask one of the more experienced users of this board. Were you insovent when you settled this debt?

lizziecat

lizziecat

Posted
Posted

Whether the creditor is a third-party collection agency or a JDB seems significant. As Satchel pointed out, JDBs buy the debt for pennies on the dollar. It looks to me like this is probably not a bona fide debt cancellation situation.

 

From IRS.GOV

2005 1099C Instructions

 

Sec. 8(a). The creditor (or a third-party collection agency) has engaged in significant bona fide collection activity during 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 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 or the sale or packaging for sale of the debt by the creditor.

 

I'd download the filing instructions for filing 1099-C (used by the creditor to determine whether a 1099C should be sent) from the website, read carefully then call the IRS and ask to speak to a Taxpayer advocate as suggested in Satchel's linked thread.

 

best of luck.

IDare

IDare

Posted
Posted (edited)

Definitely need to look at the IRS instructions. I don't see any way a JDB can claim cancelation of debt, because the JDB isn't the one who extended the CREDIT. They're not the ones suffering the loss on the bad debt.

Edited by IDare
tnphelps

tnphelps

Posted
  • Author
Posted
Definitely need to look at the IRS instructions. I don't see any way a JDB can claim cancelation of debt, because the JDB isn't the one who extended the CREDIT. They're not the ones suffering the loss on the bad debt.

 

Bump

tnphelps

tnphelps

Posted
  • Author
Posted

Definitely need to look at the IRS instructions. I don't see any way a JDB can claim cancelation of debt, because the JDB isn't the one who extended the CREDIT. They're not the ones suffering the loss on the bad debt.

 

Bump

 

I just talked with my Debt settlement company legal office. They said that I am right that I don't have to pay taxes on forgiven debt from a CA. They said to fill out a 982 form. I looked at that form and didn't see anywhere to check of for my situation. I am gonna call them back and call the IRS and a tax associate.

 

Tnp

TomKC

TomKC

Posted
Posted
Sec. 8(a). The creditor (or a third-party collection agency) has engaged in significant bona fide collection activity during 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 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 or the sale or packaging for sale of the debt by the creditor.
That refers to sale or packaging of the debt after it was cancelled, i.e., if the debt was allegedly cancelled, but then sold again.
tnphelps

tnphelps

Posted
  • Author
Posted

Well I talked with the IRS Taxpayer Advocate and they couldn't help me so they transferred me to the IRS legal department and they didn't have much of a clue either. He did explain insolvency to me and I told him my estimated liabilities and assets and there is no doubt I am insolvent so he told me how to fill that 982 form out..I have about $10,000 in assets (Rent a house, old Car) and about $35,000 to 40,000 in liabilities so I am insolvent...

 

I guess thats what the debt settlement company meanr by filling out a 982 form...

 

I tried to explain to IRS guy "How these CA's can get away with this crap" and he had nothng to say...

So the IRS wasn't much help but it looks like I won't have to pay and txes on my $4,200 debt relief....

 

Tnphelps

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