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    #1

    Tax ?

    I just received a 1099-c form from a creditor for Cancellation of Debt, tax form. I guess my understanding is that is is going to count towards our income. It's for 2200.00.
    Do you usually get one from each creditor, cause if I do and all of these are counted towards income, it is going to throw our medium income right off, we will be over the medium. Plus it will look like we made a heck of alot more than we really did. Just wondering.
    Tags: None
    #2
    Honestly, that is a unique question. For purposes of BK, I do not think cancelled (settled) debt will count towards the median income calculation. Reason being, the canceled debt is ONLY taxed if you do not meet the IRS definition of insolvent. If you are going to be filing BK, odds are you meet that definition, so the debt would not count as income for tax purposes, therefore, I doubt it would count for BK purposes.

    This will want to be a question you run by an attorney.

    Comment

      #3
      We are currently in a 13 , filed April 2006, so this is our first tax season.

      Comment

        #4
        Is the 1099 from a Creditor you included in your BK?? Or was this a debt that was "written off" or "settled" prior to you filing??
        Filed Ch 7 - 09/06
        Discharged - 12/2006
        Officially Declared No Asset - 03/2007
        Closed - 04/2007

        I am not an attorney. My comments are based on personal experience and research. Always consult an attorney in your area to address concerns related to your particular situation.

        Another good thing about being poor is that when you are seventy your children will not have declared you legally insane in order to gain control of your estate. - Woody Allen...

        Comment

          #5
          Originally posted by dac67 View Post
          We are currently in a 13 , filed April 2006, so this is our first tax season.
          If you are already in BK, why do you care about the median income thing? Once you have a confirmed plan, it really does not matter what you income does after confirmation (with some caveats).

          Since your in a Chapter 13, you should NOT be getting any 1099's for creditors included in the Chapter 13 petition.

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            #6
            We did include this creditor in our Chap 13, but the amount doesn't ad up to what we filed against. In this 1099-c there is a box that says bunruptcy - if checked and it is not checked?
            So I guess I am confused. I have not heard of others talk about getting these, and I was wondering should I be expecting these from other creditors. On the back we don't fall into any categories that would allow us not to have this applied to our yearly income. So if I was to get alot of these it would look like we made alot more money then we did, and I would have to explain why.
            I was just reading on the back and it says if any institution forgives money owed to them then they have to issue one of these.Anything over 600.00 this was for 2200. We had to include all creditors, so I will call my lawyer next week.Thanks

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              #7
              You should not be getting 1099's. However, since this hasn't come up before, I am not sure what you should do about it. I would probably make a copy of the 1099 and then mail back the 1099 with copies of the first two pages of your BK petition and the Order of Confirmation, and "politely" remind them if you filed BK.
              And, as you already have planned, contact your lawyer.

              Who is this creditor, is it a major institution or some local yocal.

              Comment

                #8
                It is from Merrick Bank

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                  #9
                  Called lawyer said he would call them , said I shouldn't be getting it. We shall see.

                  Comment

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