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 Caron
Moderator
Joined: 19 Jul 2005
Posts: 1343
Location: florida
223.40 Dollars($)
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 Posted: Wed Sep 05, 2007 3:05 am Post subject: RE: repay debt after charge-off? |
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Hi Mike,
Welcome to the forums.
It is true that the lender sends form 1099-C when he forgives the debt. And, the borrower has to pay taxes on the forgiven debt. But if he can afford, the borrower can always pay off the debt even after a few years and then claim the refund from the IRS. There is a specific time period within which this should be done. So, no one's saying that the debtor has to pay off the debt, it's just that if he is able to gather funds after the charge-off, then he can pay off the debt and improve his credit.
Good luck 
_________________
Mortgage Shopping made easy with booklet |
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priya2
Guest
0.10 Dollars($)
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| Posted: Wed Jan 23, 2008 2:46 pm Post subject: forclosure |
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| we had a forclosure in2007. the mortgage company is saying that after they sold the house, thier was a deficiency of 50 grand. they have charged the debt off, and a collector is after the money. are we obligated to pay the debt, i know the credit issue. Also since our debt was not forgiven do we get a 1099? |
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priya2
Guest
0.10 Dollars($)
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| Posted: Wed Jan 23, 2008 2:50 pm Post subject: FORCLOSURE |
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| ALSO WHAT IS THE TAX OBLIGATION WITH THE NEW TAX LAWS, AND DEBT FORGIVENESS LAWS. ? |
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larry
Joined: 27 Jun 2007
Posts: 2951
411.26 Dollars($)
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| Posted: Wed Jan 23, 2008 2:58 pm Post subject: |
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Hi Priya,
Welcome to the forum.
Your debt is not forgiven. So I think you will not get a 1099-C form. This form is given when the lender charges off the due debt.
According to the new debt forgiven Law, if the lender forgives the due debt then you need not to pay tax on the forgiven debt.
Feel free to ask if you have any further questions.
Best of luck,
Larry |
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Caron
Moderator
Joined: 19 Jul 2005
Posts: 1343
Location: florida
223.40 Dollars($)
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| Posted: Fri Jan 25, 2008 5:39 am Post subject: RE: charge off debt and 1099-C form |
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Hi Priya,
Your debt has been charged off which means it has been canceled or forgiven. Hence you will be issued a 1099-C Form which implies that the mortgage company has stopped all attempts to recover the debt. However, they shouldn't have sold it off to a collector.
Formerly the 1099-C Form also implied that you need to pay taxes on the canceled debt which is reported to the IRS as your income. That's the reason this form is being sent to a borrower as well as to the IRS.
However since the Mortgage Forgiveness Debt Relief Act of 2007 is already into effect, therefore you need not pay tax on the canceled debt and hence the lender might send you the Form just to keep a written proof of the fact that he has canceled your debt.
Regarding the collector asking you for the debt, I suggest that you talk to the lender and clarify this. If he has charged-off the debt, he shouldn't collect it. This is not an unsecured debt that he'll ask the collector to collect on his behalf. Instead of collection, mortgages are being foreclosed when a borrower defaults.
Good luck
_________________
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Alex12
Guest
0.10 Dollars($)
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| Posted: Fri Jun 20, 2008 11:03 pm Post subject: |
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Your debt has been charged off which means it has been considered as uncollectible by the lender. But it is not canceled or forgiven. Hence a 1099-C Form may not be issued. However, since the debt is no longer secured (as property is sold off), therefore the lender has sold it off to a collection agency and now it's the latter that will try to collect the unpaid debt from you.
Since the debt is not canceled, therefore the question of paying tax does not arise here. |
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