1099-C issued and Collection Agency

[mkelley76]

We received a 1099-c in the mail and it has Cancelled Debt in the Amount of $10,961.78 and it says we must file this as income, and we will have to pay taxes on it if we aren't insolvent. Since we received the 1099-C we have been contacted by a Collection Agency wanting us to settle on this debt. I need to know: Can a Collection Agency try to collect a debt once the Financial Institution has filed the 1099-C? Can they sue after the 1099-c? They are suppose to call back today and I have been told not to settle anything and that If we make a payment on the account it would start the SOL over again. The collection Agency is giving us till Friday to make a decision. They told us that they can suspend our driver's license and any work license if this debt is ignored. Can they do that? This debt is on an Automobile and they never even made any attempt to repo it. Collection efforts haven't been made in at least 6 years and now they start after a 1099-C is issued. We are Located In Alabama and I need to know Our Rights on this matter. The debt is in my husbands name only, and the debt was incurred thru a previous marriage. During that time him and his ex-wife filed Ch 13. The Ch. 13 was dismissed in 2000 and no further collection has been made on the account. I need advice regarding this Issue.
Thanks,
Mkelley
Alabama

[LdiJ]

Originally Posted by mkelley76

We received a 1099-c in the mail and it has Cancelled Debt in the Amount of $10,961.78 and it says we must file this as income, and we will have to pay taxes on it if we aren't insolvent. Since we received the 1099-C we have been contacted by a Collection Agency wanting us to settle on this debt. I need to know: Can a Collection Agency try to collect a debt once the Financial Institution has filed the 1099-C? Can they sue after the 1099-c? They are suppose to call back today and I have been told not to settle anything and that If we make a payment on the account it would start the SOL over again. The collection Agency is giving us till Friday to make a decision. They told us that they can suspend our driver's license and any work license if this debt is ignored. Can they do that? This debt is on an Automobile and they never even made any attempt to repo it. Collection efforts haven't been made in at least 6 years and now they start after a 1099-C is issued. We are Located In Alabama and I need to know Our Rights on this matter. The debt is in my husbands name only, and the debt was incurred thru a previous marriage. During that time him and his ex-wife filed Ch 13. The Ch. 13 was dismissed in 2000 and no further collection has been made on the account. I need advice regarding this Issue.
Thanks,
Mkelley
Alabama

Whether or not you have to file the 1099 C on your income taxes depends on alot of different factors. See a tax professional in your area for an answer on that. "Basis" has a lot to do with whether or not you must report the 1099C as income....as well as insolvency.

However....once a 1099 C has been issued collection efforts are supposed to stop. At that point the creditor has taken a tax deduction for the debt. I would ignore the collection agency (but do respond and deal with any court summons that you may recieve)