If someone else negotiates and pays off my debts, who will receive the 1099c form? Me or them?

[HemispheresX1]

What is the name of your state? Virginia.

Long story short I've been in a mental hospital since early 2019. Prior to hospitalization I had quite a few credit card accounts, a debt I would roughly estimate to be around 15k dollars.

I recently got a hefty personal injury settlement from an vehicle vs pedestrian accident I was involved in last year while on a community pass from the hospital. Because I am locked out my bank account due a legal judgement against me I signed the check over my my aunt (power of attorney) and had her deposit it into her account.

Yesterday she settled a debt with one of the outfits I owe, but I didn't find out until later that evening that I would be expected to pay taxes on the difference. My question is this: Will the lender or debt collector issue the 1099-c form in my name or her name since she is paying off all of the debts using her name and debit card info?

 

[Zigner]

What is the name of your state? Virginia.

Long story short I've been in a mental hospital since early 2019. Prior to hospitalization I had quite a few credit card accounts, a debt I would roughly estimate to be around 15k dollars.

I recently got a hefty personal injury settlement from an vehicle vs pedestrian accident I was involved in last year while on a community pass from the hospital. Because I am locked out my bank account due a legal judgement against me I signed the check over my my aunt (power of attorney) and had her deposit it into her account.

Yesterday she settled a debt with one of the outfits I owe, but I didn't find out until later that evening that I would be expected to pay taxes on the difference. My question is this: Will the lender or debt collector issue the 1099-c form in my name or her name since she is paying off all of the debts using her name and debit card info?

It will be issued in your name.

Having said that, you really ought to be concerned about your fraudulent transfer.

 

[HemispheresX1]

It will be issued in your name.

Having said that, you really ought to be concerned about your fraudulent transfer.

It isn't a fraudulent transfer seeing as how in the state of VA debt collectors aren't entitled to proceeds from a personal injury settlement.

Furthermore I'm not required to pay them back out of the proceeds as I could file for bankruptcy and still keep the monies but I decided it would be best to at least negotiate the debt owed to them.

 

[Taxing Matters]

My question is this: Will the lender or debt collector issue the 1099-c form in my name or her name since she is paying off all of the debts using her name and debit card info?

You are the debtor and the creditor will issue the 1099-C to you. Whether you would need to include the discharged (forgiven/canceled) amount into income depends on some additional information, in particular whether you were insolvent at the time of the discharge. If you were insolvent — your debts exceeded your assets — then some or all of the discharged amount may be excluded from income. Even if some amount of the discharged debt is included in income whether you actually pay tax on it depends on the details of your income, deductions, and credits for the tax year. See IRS Publication 4681 for more information on the tax treatment of canceled debt.

Having said that, you really ought to be concerned about your fraudulent transfer.

It isn't necessarily a fraudulent conveyance. If the money was given to the aunt to hold for the OP in her role as power of attorney, guardian, conservator, etc., that's not a fraudulent conveyance as the money still belongs to the OP. Even if the money was given as a gift to the aunt, that alone does not automatically make it a fraudulent conveyance.

 

[HemispheresX1]

It isn't necessarily a fraudulent conveyance. If the money was given to the aunt to hold for the OP in her role as power of attorney, guardian, conservator, etc., that's not a fraudulent conveyance as the money still belongs to the OP. Even if the money was given as a gift to the aunt, that alone does not automatically make it a fraudulent conveyance.

Pretty much this. My aunt put the money in a separate account so it would be easily identifiable as the money from the settlement and also said if any debtor files for a motion of discovery of assets she would make it known the my money was in that account. Either way the money can't be taken as per VA law so I'm not terribly worried.

 

[Zigner]

Fair enough -I stand corrected.

 

[FlyingRon]

I'm not sure there is such an exemption. While there are a couple of dozen exemptions from attachment in the Virginai code, personal injury suits aren't one of them.

 

[PayrollHRGuy]

https://law.lis.virginia.gov/vacode/title34/chapter3/section34-28.1/

 

[Just Blue]

It's always a good idea to read the TOS on a new site you join.

 

[HemispheresX1]

It's always a good idea to read the TOS on a new site you join.

Lol. Words of wisdom.