Question from Did: If debt collector files 1099-c and I have to claim it on my taxes can they still collect on debt?
Also can it still show on credit report? In Texas…
Hello,
When a debt collector files a 1099-C, it means they have cancelled or forgiven your debt. This is often done when the debt is deemed uncollectible. However, the cancelled debt is considered taxable income by the IRS, and you must report it on your tax return.
Can they still collect on the debt?
According to the IRS, once a debt is cancelled and a 1099-C is issued, the debt collector should not continue to collect on the debt. The issuance of a 1099-C represents the creditor’s decision to write off the debt, and any further collection attempts could be seen as a violation of the Fair Debt Collection Practices Act.
Can it still show on your credit report?
Yes, a cancelled debt can still appear on your credit report. According to the Federal Trade Commission, a debt can remain on your credit report for up to seven years from the date of delinquency. However, the fact that a 1099-C has been issued should be noted on your credit report, which may mitigate the negative impact of the debt.
Here are some steps you can take if you find yourself in this situation:
- Verify the debt: Make sure the debt is yours and the amount is correct.
- Pay the tax on the cancelled debt: Include it in your taxable income when you file your tax return.
- Check your credit report: Ensure the cancelled debt is accurately reported.
Remember, it’s important to keep all documentation related to the debt and its cancellation. If the debt collector attempts to collect on the debt after issuing a 1099-C, you can use this documentation to dispute the collection attempt.
Please note that this information is a general guideline and may not apply to your specific situation. It’s always a good idea to consult with a tax professional or a credit counselor if you have questions or concerns about a 1099-C and its impact on your taxes and credit report.
