Author Topic: debt collection after issuing a 1099-C  (Read 7179 times)

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HeadsUp

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debt collection after issuing a 1099-C
« on: February 04, 2010 11:21:37 PM »

I have done a lot Google search on this and some people say after the creditor issues a 1099-C they can't sell it, they can't attempt to collect it without getting into some trouble with the I.R.S.

Other people say, they issue the 1099-C and then sell the debt or continue trying to collect it themselves and the I.R.S. doesn't care at all.

Which one is true?

If a debt collector issued a 1099-C, and then sold the debt to a junk debt buyer, and then the junk debt buyer sent me a collection letter in the mail, I think I will send a copy of it along with a copy of the 1099-C directly to the I.R.S. and accuse the junk debt buyer and the creditor who sold the canceled debt of tax fraud.
Finally a collector admits it...

"The reality is that there are people who can't pay and the job of an agency in my opinion is to separate those who can and those who cant and to not waste resources and efforts on those who cant." -- Dr. Evil.

All this nonsense about aggressive judgment enforcement against someone with no assets is just that-- utter nonsense.

http://www.debtorboards.com/index.php?topic=13309.msg100303#msg100303

DefLepGirl

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Re: debt collection after issuing a 1099-C
« Reply #1 on: February 05, 2010 02:17:16 AM »
Id take it one step further....... (and have)

If they issue a 1099C and can not validate the debt it's put simply FRAUD

And opposing counsel does not like to hear those words.........  ;)
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HeadsUp

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Re: debt collection after issuing a 1099-C
« Reply #2 on: February 05, 2010 05:35:34 PM »

I think the judge would find it interesting that they are trying to collect a debt that was canceled in the eyes of the IRS.

I think I have finally figured it out.

Debt collectors routinely violate the Fair Debt Collection Practices Act, the TCPA, the state's Statute of Limitations, and Bankruptcy stays, so why wouldn't they ignore a 1099-C as well?  As with all those other violations, it is up to the debtor to file a written answer in court and attend the court hearing to keep the debt collector from getting a judgment.

This 1099-C was issued after the debt just sat there quietly with no collection activity for 36 months.

If Arizona's Statute of Limitations for credit card debt is 3 years, then this debt is already as dead as a doornail.
Finally a collector admits it...

"The reality is that there are people who can't pay and the job of an agency in my opinion is to separate those who can and those who cant and to not waste resources and efforts on those who cant." -- Dr. Evil.

All this nonsense about aggressive judgment enforcement against someone with no assets is just that-- utter nonsense.

http://www.debtorboards.com/index.php?topic=13309.msg100303#msg100303

NotBonJovi

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Re: debt collection after issuing a 1099-C
« Reply #3 on: February 06, 2010 01:50:49 AM »
Debt collectors routinely violate the Fair Debt Collection Practices Act, the TCPA, the state's Statute of Limitations...

...

If Arizona's Statute of Limitations for credit card debt is 3 years, then this debt is already as dead as a doornail.


The whole 1099 issue aside, just because a debt is SOL does not mean it is illegal for them to collect/sue on the debt. The statutes of limitations does not extinguish the debt - the statute of repose does, and there are only two states that offer this type of protection.

To the best of my information and belief, Arizona is not one of them.

The fact that a a debt is SOL serves as an affirmative defense against the suit.
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itsmeagain

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Re: debt collection after issuing a 1099-C
« Reply #4 on: February 06, 2010 02:12:43 AM »
Sure, they can sue but there might be a few repercussions to filing on a SOL debt . . . .

COUNTERCLAIMS. 

I can think of a few . . . .

  • 1692 d Any conduct the natural consequence of which is to harass, oppress, or abuse any person
  • 1692 e Any other false, deceptive, or misleading representation or means in connection with the debt collection
  • 1692 e(2) Misrepresinting the character, amount, or legal status of the alleged debt
  • 1692 e(5) Threaten to take (or take), any action that cannot legally be taken or that is not intended to be taken
  • 1692 e(10) Any false representation or deceptive means to collect a debt or obtain information about a consumer
  • 1692 f Any unfair or unconscionable means to collect or attempt to collect the alleged debt

Any others?

NotBonJovi

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Re: debt collection after issuing a 1099-C
« Reply #5 on: February 06, 2010 02:21:22 AM »
Sure, they can sue but there might be a few repercussions to filing on a SOL debt . . . .

COUNTERCLAIMS. 

I can think of a few . . . .

  • 1692 d Any conduct the natural consequence of which is to harass, oppress, or abuse any person
  • 1692 e Any other false, deceptive, or misleading representation or means in connection with the debt collection
  • 1692 e(2) Misrepresinting the character, amount, or legal status of the alleged debt
  • 1692 e(5) Threaten to take (or take), any action that cannot legally be taken or that is not intended to be taken
  • 1692 e(10) Any false representation or deceptive means to collect a debt or obtain information about a consumer
  • 1692 f Any unfair or unconscionable means to collect or attempt to collect the alleged debt

Any others?

Of course...but this is when they drop the suit before the court date, sobbing all the way home to Mommy on their Mercedes' Bluetooth because they were hoping for an easy default. First crush is always the worst, but it gets a tad easier over time.

You're not insinuating that potentially breaking the law stops debt collectors from trying, are you?  :vbrofl:
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itsmeagain

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Re: debt collection after issuing a 1099-C
« Reply #6 on: February 06, 2010 03:30:16 AM »
You're not insinuating that potentially breaking the law stops debt collectors from trying, are you?  :vbrofl:

Of course not, just ask Doc E . . . . .  eleyphant

Flyingifr

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Re: debt collection after issuing a 1099-C
« Reply #7 on: February 06, 2010 05:00:11 PM »
Here's a novel and untested theory:

Since a 1099C is for debt cancellation, by issuing the 1099C they are stating in writing that the debt has been canceled - meaning they forgave it. By subsequently trying to collect, they violate FDCPA my misrepresenting the legal nature of the debt (meaning that a canceled debt is still collectable).

IRS pronouncements to the contrary notwithstanding, that would be my position in Court.
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NotBonJovi

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Re: debt collection after issuing a 1099-C
« Reply #8 on: February 06, 2010 05:48:46 PM »
Just to clarify my stance, my was speaking from a NON-1099-C standpoint. More specifically, addressing HeadsUp comment that the statute had passed, therefore "this debt is already as dead as a doornail."

Unless your in a state with where the SOR has run or if you were issued a 1099-C, the debt is NOT "dead;" the statute of limitations does not extinguish the debt.

I suppose it's safe to say that my statement was more for the newbies reading this thread rather than HeadsUp's situation.  :)

Itsme: You're not insinuating Dr. E would break laws, are you?  :o

I mean legal ones - not moral ones, obviously.  :vbrofl:
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CleaningUp

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Re: debt collection after issuing a 1099-C
« Reply #9 on: February 06, 2010 06:16:46 PM »
The sense of the OPs post is talking of a 1099-C having been issued.

Flyingifr's point that a 1099-C is for the cancellation of debts. If a "creditor" elects to put in writing that the debt has been cancelled, then the logic follows that the debt is canceled. It's just as good as a paid-in-full stamp on a bill.

It would be difficult for a subsequent JDB to argue that their collection activities are legitimate when they are presented with the evidence that the debt has been canceled.

At some point, the subsequent JDB may realize that they've been sold a pig-in-a-poke by one of their fellow professionals.

How ironic. A third-party collector being less than honest.






HeadsUp

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Re: debt collection after issuing a 1099-C
« Reply #10 on: February 08, 2010 05:11:05 PM »
Just to clarify my stance, my was speaking from a NON-1099-C standpoint. More specifically, addressing HeadsUp comment that the statute had passed, therefore "this debt is already as dead as a doornail."

Unless your in a state with where the SOR has run or if you were issued a 1099-C, the debt is NOT "dead;" the statute of limitations does not extinguish the debt.

I suppose it's safe to say that my statement was more for the newbies reading this thread rather than HeadsUp's situation.  :)

Itsme: You're not insinuating Dr. E would break laws, are you?  :o

I mean legal ones - not moral ones, obviously.  :vbrofl:

:) 

Yes, for the noobs out there, when I said the debt was as dead as a doornail because it was beyond the statute of limitations, I mean they can still sue me, but they won't win because I will fight them in court and use the SOL as an affirmative defense.  But it would still be up to me file a written answer to the lawsuit in court and make a personal appearance in court.  Otherwise the debt collector could get a default judgment.
Finally a collector admits it...

"The reality is that there are people who can't pay and the job of an agency in my opinion is to separate those who can and those who cant and to not waste resources and efforts on those who cant." -- Dr. Evil.

All this nonsense about aggressive judgment enforcement against someone with no assets is just that-- utter nonsense.

http://www.debtorboards.com/index.php?topic=13309.msg100303#msg100303

flacorps

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Re: debt collection after issuing a 1099-C
« Reply #11 on: February 08, 2010 08:37:37 PM »
Here's a novel and untested theory:

Since a 1099C is for debt cancellation, by issuing the 1099C they are stating in writing that the debt has been canceled - meaning they forgave it. By subsequently trying to collect, they violate FDCPA my misrepresenting the legal nature of the debt (meaning that a canceled debt is still collectable).

IRS pronouncements to the contrary notwithstanding, that would be my position in Court.

I think that would be a winner for you in Connecticut due to Franklin Credit v. Nicholas: http://www.jud.ct.gov/external/supapp/Cases/AROap/AP73/73ap59.pdf

I don't think you'd have any fun in any other state.
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flacorps

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Re: debt collection after issuing a 1099-C
« Reply #12 on: February 10, 2010 03:01:39 PM »
I haven't linked to this article in a while because for some reason I hadn't been able to find it. But now I found it again: http://www.ryancareycpa.com/Papers/Tickmarks%20Fall%202006%20Article%20-%20Carey.pdf
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NotBonJovi

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Re: debt collection after issuing a 1099-C
« Reply #13 on: February 10, 2010 05:22:08 PM »
I haven't linked to this article in a while because for some reason I hadn't been able to find it. But now I found it again: http://www.ryancareycpa.com/Papers/Tickmarks%20Fall%202006%20Article%20-%20Carey.pdf

Wow...thanks, flacorps!  :)
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xYBDx

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Re: debt collection after issuing a 1099-C
« Reply #14 on: February 11, 2010 07:50:21 PM »
I'm going to argue the logic in some of those arguments made in that Ryan Carey paper.

A bow to FlaCorps for such excellent research too!!

Logic dictates that one cannot have IMPUTED INCOME and still owe the debt. If you still owe the debt, then the "note" or whatever that represents the debt (a thing of value, real or ethereal) has not changed hands.

You sell me a thing, I give you an IOU of some form. If merely having exchanged a "thing" for a promise/note/debt acknowledgement generates imputed income, then everyone who mortgages a home, or buys a car on credit, etc, owes the IRS a <removed>load of money in imputed income.

Obviously they don't, so it isn't the case. The imputed income is generated at the point where it is clear the debtor will NOT be paying whatever the terms call for to the creditor. Only at THAT point is there imputed income.

Now, if you file a 1099C and the debtor now suddenly has imputed income that they are liable for, some event has occured out side of simply owing a debt. They owed the debt for all the time before the 1099C and yet had no imputed income until... the 1099C was filed.

So logically, the debtor gained imputed income from the act of the creditor DISCHARGING the debt to the IRS with the form 1099C. The creditor gets to write the debt off its own taxes, and the debtor is on the hook to the IRS for the taxes due on the imputed income.

You simply cannot OWE taxes on the imputed income AND also owe the debt to the creditor... otherwise everyone this second owes the IRS taxes on the imputed income of the "debts" they owe, to whomever for whatever reason. OR, the 1099C is an event that causes the relationship of the debt to change.

Cannot be both ways, it is utterly illogical and in-equitable for such a conundrum to exist.

Any judge finding otherwise is a fool or an idiot.

« Last Edit: February 11, 2010 08:11:38 PM by Mod3507 »
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