IRS Sent a 1099-C What Next.  Bankruptcy FAQ 1099

Received 1099-C form from creditors after bankruptcy? Will You Get Tax for the 1099-c?. Bankruptcy and 1099-C Questions? Pay taxes on discharged debts? Steps to take to make

1099-C and Bankruptcy - Common Questions Asked

Most of the time you will not receive a 1099-C from your creditor after you filed bankruptcy and your debt was discharged.  If you do receive one there are a few steps you may want to take to make sure you actually have any tax liability for the 1099-C . 

 WHAT IF I DON’T RECOGNIZE THE NAME OF THE CREDITOR?

 If you do received 1099c you might find that you don’t recognize the name on the form.  This is common,  since loans or debts are often sold to someone else for collection purposes.   However, from a post-bankruptcy standpoint you want to get rid of the possible tax liability.  Your in a quandary as to why you received it in the first place.  Although this situation is NOT something your bankruptcy attorney will help you with since he or she is not your account or tax person, my office will discuss this with my client(s) or provide them with valuable literature on what their options are should they receive a 1099-C.   This does not happen very often.

 WHY DID I RECEIVE A 1099-C FORM FROM A CREDITOR?

 Here are some common reasons:

1. If you have been in default of a debt (behind or you have not paid the debt).

2. The creditor “charged off” your debt and the debt is more than $600.00.

3. You went to a debt relief counselor and the creditors agreed to accept less that what was owed.  (This is one of the downfalls of using  a debt relief counselor over bankruptcy).

4.  The second loan on your home was reduced or forgiven by the lender.

5. You were a guarantor on a loan that was written off.

6. Your debt was discharged in bankruptcy but the creditor still sent one anyway. 

 If  items 1 through 5 happen, you are probably going to have to pay taxes that result from it unless the debt was discharged in bankruptcy PRIOR to the 1099-c.

 DO I NEED TO DO ANYTHING WHEN I GET THE FORM?

NO-  If you WANT to pay the taxes resulting from it.  

 YES- If you want to contest it or that the debt was discharged in bankruptcy before it was charged off by the creditors.   OR

If you were “INSOLVENT” at the time of the creditors charging off the debt.

 Since this is a bankruptcy web site I will deal with the issue that your debt was discharged in bankruptcy before the creditors “charged off” the debt.   If you did file for bankruptcy before the charge off then always contest the 1099-C you received.

 One way to determine if the debt was charged off prior to the filing bankruptcy, check your credit report especially the one that you provided your attorney prior to filing.

 The next exception is relevant to the charge off date and the status of the bankruptcy. Were you INSOLVENT at the time of the charge off of the debt?

So the next question you will ask is, “WHAT IS THE MEANING OF BEING INSOLVENT”?

 To determine if you were insolvent, add up all of your debt (including all the amounts being charged off) or at the time of the charge off and all of your assets including money in your bank accounts.  If you owed more than what you are worth then you were insolvent.

 Example 1:  $100,000. worth of assets  (FMV of cars, boats, cash, stocks, etc)

$ -70,000  Debt owed prior to the charge off.                                      

+  30,000 your 1099-C appears to be valid  (You might have to pay taxes on it). If your income is low, the taxes may be nothing or if your income is high the amount of taxes could be substantial.

Example  2:   $100,000. worth of assets  (FMV of cars, boats, cash, stocks, etc)

                        $ -70,000  Debt owed prior to the charge off.

                        $ -50,000  (Family residence is “upside down” -you owe more than it is worth). 

                       $ -20,000  NEGATIVE at the time of the charge off- you were INSOLVENT.

 In Example 2, you should take the necessary steps to contest the 1099-C.   A word of note, this is NOT the duty of your bankruptcy attorney!  It is YOUR responsibility to do so through your accountant or tax professional.  Your bankruptcy attorney assisted you in getting your debt discharged and does not to provide tax advice or legal advice. 

 When adding the total of your assets use the fair market value at that time.  This could be through e-bay values, swap meet values or the classified ad values in your newspaper.

 You could also obtain information from the IRS website for the 1099-C information and form or your tax professional can assist you in filling out the form.  For my bankruptcy clients who received a 1099-C, post bankruptcy, I will provide a “sample” letter to send to the IRS and the tax form upon request.  This is just one of the benefits my clients receive without any charge.

 Again, for more information go to the IRS WEB SITE  FOR IRS-1099-C  tax form_________.

 Please remember that each and every case may be different so you should always discuss everything with your attorney prior to filing bankruptcy.  I estimate that 95% of my Chapter 7  clients  are “upside down” when they get a “charge off” from a creditor.  In other words they most likely would not have to pay any additional taxes on the 1099-C since they were insolvent.  

 Important!  In some cases, 1099-C’s may be treated as income and you could lose any public benefit or assistance if not contested.   Also the tax laws are always changing so check with you CPA or you tax return person for before filing you state and federal tax returns.

 This website provides information regarding the 1099-C form and is not to be construed as legal Advice. 

Attorney David A. Casey only represent clients in California and is a member of the State Bar of Calif.  

1099-C Questions? Will You Have Taxes On Discharge Debts?

Receive a 1099-C from your creditors after bankruptcy? Pay taxes on discharged debts? Steps to take to make sure you actually have any tax liability for the 1099-C, Most don’t!

                    See if you are qualified under Chapter 7, call today to get a fresh start.

Area of Service: La Mesa, Alpine 91901 Bonita 91902  El Cajon 92019, El Cajon 92020, El Cajon 92021, El Cajon 92022, El Cajon 92090, La Mesa  91941, 91942, 91943, 91944.  Lakeside 92040  Lemon Grove 91945, 91946.  Ramona 92065,  Santee 92071.   Spring Valley 91976 92977 91978 91979 

Alpine 91901 Bonita 91902  Chula Vista 91909-91915 - 91921 Coronado 92118, 92178  Del Mar  92014 Dulzura 91917  El Cajon 92019-92020, 92021 92022 - 92090  Escondido 92025-92027 - 92029-92030 - 92033, 92046  Imperial Beach 91932-91933  Jacumba 91934 Jamul 91935  Julian 92030 La Jolla 92037-92039  - 92092-92093 La Mesa 91941 91942 91943 91944  Lakeside 92040  Lemon Grove 91945-91946  MCAS Miramar 92145  Pacific Beach 92109 Pine Valley 91962 , 91990  Ramona 92065  Rancho Bernardo 92128  Rancho Santa Fe 92067, 92091  Santee 92071 -  92072 Solana Beach 92075  Spring Valley 91976 92977 91978 91979   Lemon Grove 91945, 91946.  Santee 92071. La Mesa 91941, La Mesa 91942, La Mesa 91943, La Mesa 91944, (La Mesa 91941, 91942, 91943, 91944,)  El Cajon 92019, El Cajon 92020, El Cajon 92021 El Cajon 92022, El Cajon 92090

Got a 1099-C Tax- Does Bankruptcy & 1099c Taxes

(619) 447-6780

  Talk to a Bankruptcy Attorney who is a Pro and compare Chapter 13 to Chapter 7

Free Bankruptcy Consultation

Will You Get 1099-C Tax- Does Bankruptcy Create A Tax Liability?

My office is just minutes away  from and you don't have to go San Diego for a experience bankruptcy attorney. Call today to start the process of becoming debt free again.

Chapter 7 and Chapter 13  bankruptcy laws are made to help you getting a fresh start.

Will You Get A 1099-C. IRS & Bankruptcy and 1099-C Answers

Live in east county or near El Cajon? Received 1099-C form from creditors after bankruptcy? Will You Get Tax for the 1099-c? Bankruptcy and 1099-C Questions? Pay taxes on discharged debts? Steps to take to make

Call the Bankruptcy law office of David A. Casey today for Debt relief under the bankruptcy code.

For Web Hosting and domain names provided but Netaccess4u.com  

 Any legal content contained on this website, nor any from the licks listed above  are not intended to and  does NOT constitute legal advice

                             Links to Bankruptcy Web Sites.

Attorneys Chapter 7 Bankruptcy | Chapter 7 Attorneys San Diego | Bankruptcy, Charge Cards Debt Relief, Best Debt Relief Options

Which on is Better? Bankruptcy or Debt Counseling Services

Bankruptcy information web sites in San Diego County

Debt Relief | Chapter 13  Bankruptcy|  El Cajon | 13 Debt Relief  | Attorney Chapter 7 | Bankruptcy Attorney | Chapter 7 Attorney, Chapter 7 Lawyer |