1099-c

[rya2048666]

I am in Arizona and at the beggining of the year, i receieved a 1099-C Cancellation of debt from the finance company for the reposession of a car for $15000.00 cancelling the debt. I then recieve a letter in June of this year stating if i dont give them $15000.00 then they will take me to court. I now recieved a summons, and i have to pay $60.00 to file a response with the court. I was wondering if they are allowed to sue me after the cancelled the debt and sent me that form? thaks

 

[LdiJ]

I am in Arizona and at the beggining of the year, i receieved a 1099-C Cancellation of debt from the finance company for the reposession of a car for $15000.00 cancelling the debt. I then recieve a letter in June of this year stating if i dont give them $15000.00 then they will take me to court. I now recieved a summons, and i have to pay $60.00 to file a response with the court. I was wondering if they are allowed to sue me after the cancelled the debt and sent me that form? thaks

By sending you that form, they wrote off the debt and it became taxable income to you (unless you qualified for an exclusion). Therefore in my opinion, it was not valid for them to sue you. However, they have done so and now you need to defend yourself.

 

[rya2048666]

Re:

Yes that is what I was thinking, I have 20 days to send a reply, which I am working on now, and I am including a copy of that form as well.

 

[cosine]

I would also send a notice (by CMRRR) to the IRS notifying them that this company is trying to double-dip from the taxpayers while also continuing to collect debts.

 

[TigerD]

In your defense you need to assert that the debt was forgiven.

DC

 

[cosine]

What is the date shown on the 1099-C for the tax year? If it was 2010, did you pay your 2010 taxes based on that 1099-C amount as included in your income? If you have, you are in a better position if they try to argue that their 1099-C is rescinded (which is already a weak argument, but if you paid the taxes on it, it is even weaker).

 

[bigun]

The question of a debt being collected after a 1099C is sent is a state specific thing. Some allow it and some don't. In Az. it appears to be case by case. You really need to see a lawyer.

Barski Drake Blog 1099-C

I'd also encourage you to take a look at a federal case.

DBA vs Snow. Debt Buyers Assoc. vs John Snow {former Sec. of the Treasury}.
I can only find PDF links but, here's a snippet from the ruling.

Plaintiff insists that issuance of 1099-C Forms will prohibit Debt Buyers from pursuing debt collection and enforcement activities after such forms are issued, which may be before a state’s statute of limitations for the collection of such debts has expired. However, as stated above, there is no reason that a Debt Buyer cannot include with its statement to an affected debtor an instructional guideline explaining the reasons for the issuance of the 1099-C (for example, because 36 months have transpired without debt collection activity), a disclaimer that a 1099-C must be issued as a result of an identifiable event regardless of whether an actual discharge of indebtedness has occurred on or before the date of such an event, and a notice to the debtor that a Debt Buyer plans to continue debt collection activitie

 

[LdiJ]

The question of a debt being collected after a 1099C is sent is a state specific thing. Some allow it and some don't. In Az. it appears to be case by case. You really need to see a lawyer.

Barski Drake Blog 1099-C

I'd also encourage you to take a look at a federal case.

DBA vs Snow. Debt Buyers Assoc. vs John Snow {former Sec. of the Treasury}.
I can only find PDF links but, here's a snippet from the ruling.

Plaintiff insists that issuance of 1099-C Forms will prohibit Debt Buyers from pursuing debt collection and enforcement activities after such forms are issued, which may be before a state’s statute of limitations for the collection of such debts has expired. However, as stated above, there is no reason that a Debt Buyer cannot include with its statement to an affected debtor an instructional guideline explaining the reasons for the issuance of the 1099-C (for example, because 36 months have transpired without debt collection activity), a disclaimer that a 1099-C must be issued as a result of an identifiable event regardless of whether an actual discharge of indebtedness has occurred on or before the date of such an event, and a notice to the debtor that a Debt Buyer plans to continue debt collection activitie

The only problem with quoting that snippet is that the debt collector LOST that case...or rather it was dismissed by the federal court.

 

[bigun]

The only problem with quoting that snippet is that the debt collector LOST that case...or rather it was dismissed by the federal court.

The case is on point. DBA argued that issuing a 1099C precluded them from collecting a debt. The court disagreed and pointed out that they could include language in the communication with a debtor that perserved the right to sue.
Here's the appelate decision in AZ. The appealte court does cite DBA vs Snow in their ruling.

No.?1 CA-CV 08-0840. - AMTRUST BANK v. FOSSETT - AZ Court of Appeals

As one court has noted, a lender that issues a Form 1099-C when it still intends to try to collect on the debt might alert the borrower to that effect.  Snow, 481 F.Supp.2d at 14 (“no reason that [the lender] cannot include with its statement to an affected debtor an instructional guideline explaining the reasons for the issuance of the 1099-C ․ and a notice to the debtor that [the lender] plans to continue debt collection activities”).

 

[LdiJ]

The only problem with quoting that snippet is that the debt collector LOST that case...or rather it was dismissed by the federal court.

The case is on point. DBA argued that issuing a 1099C precluded them from collecting a debt. The court disagreed and pointed out that they could include language in the communication with a debtor that perserved the right to sue.
Here's the appelate decision in AZ. The appealte court does cite DBA vs Snow in their ruling.

No.?1 CA-CV 08-0840. - AMTRUST BANK v. FOSSETT - AZ Court of Appeals

As one court has noted, a lender that issues a Form 1099-C when it still intends to try to collect on the debt might alert the borrower to that effect.  Snow, 481 F.Supp.2d at 14 (“no reason that [the lender] cannot include with its statement to an affected debtor an instructional guideline explaining the reasons for the issuance of the 1099-C ․ and a notice to the debtor that [the lender] plans to continue debt collection activities”).

I don't see how that is possible. Its contradictory to the law.

 

[bigun]

I don't see how that is possible. Its contradictory to the law.


Not sure why you think it's contradictory. DBA vs. Snow is a federal court ruling and Amtrust vs Fossett is a state appellate court ruling. Both legimate court cases.
There was quite a discusion about 1099C's a few years ago on another site and reality is, state law is just all over the place.
Az. is different because it would appear it's going to be up to the trial judge. The defendant can argue that a 1099C does mean the debt is forgiven while the plantiff is free to argue that the 1099C was sent just to comply with IRS regs and they had no intention of forgiving the debt.

 

[rya2048666]

Small Claims

Yes, I believe they are trying to just get more money, because they are taking me to small claims court. They lowered the amount from 15000 plus interest to 9,999.99 to be able to go to small claims court, but then they add 5,000 of interest so it is still 15,000.00. I dont have much money to pay for a lawyer, I have to pay $60.00 To file a reply and that is what i am working on now. If they come back with a rebuttal I will probably be getting a lawyer.

 

[rya2048666]

Re

What is the date shown on the 1099-C for the tax year? If it was 2010, did you pay your 2010 taxes based on that 1099-C amount as included in your income? If you have, you are in a better position if they try to argue that their 1099-C is rescinded (which is already a weak argument, but if you paid the taxes on it, it is even weaker).

I did not because I am insolvent. Plus I only make $8.00 per hour, I cant even afford to live let alone pay $15,000.00. So if they are double dipping then it is ridiculous.

 

[cosine]

If they are double dipping, I want MY government to know about it. If they are doing it on you, they are probably doing it on others. If they get away with it, it's MY taxes that go up.

 

[LdiJ]

I did not because I am insolvent. Plus I only make $8.00 per hour, I cant even afford to live let alone pay $15,000.00. So if they are double dipping then it is ridiculous.

I hope that you reported the income and then excluded it using form 982. Otherwise you are going to get a love letter from the IRS sometime next spring or summer.