CC charge offs

[wanuvas]

Just a question I'm hoping can be answered.

If you file a Ch 13, can the CC companies charge off the debt and then you get a 1099 for taxable income for that year?

If not can someone enlighten me on how that part of the process works?

Thanks for the help.

[OHBOY]

Just a question I'm hoping can be answered.

If you file a Ch 13, can the CC companies charge off the debt and then you get a 1099 for taxable income for that year?

If not can someone enlighten me on how that part of the process works?

Thanks for the help.

They will not send you a 1099 as your debt is being discharged through BK.
1099's only apply to debt reduction, settlements, ect. outside of the bankruptcy protection

[HHM]

which "part of the process"?, charge off, forgiven debt tax, or chapter 13? (your demonstrative pronoun "that" does not have a clear reference )

The easiest answer, once you file chapter 13, there are no income tax consequences. Also, a charge-off does not trigger forgiven debt. A charge-off is merely a tax and accounting entry of the lender to show the loan as a loss (i.e. bad debt), but it does not mean it is forgiven the debt. Banks, through various regulations, are required to charge off debts after 180 days if no payment has been received so that shareholders and accounting records accurately reflect the financial status of the institution.

[wanuvas]

Thanks for the quick response. Thanks for asking me to clarify the use of the word "that." It's a good reminder that being precise is usually better in these types of matters.

OHBoy answered my question I think. We are looking to file in Feb. and I wanted to make sure I understood what could happen down the road. If I understood the answer correctly the bank will write off the balance to bad debt from an accounting perspective... as long as they don't forgive the balance there is no income tax consequence and it's a moot point once we file the Ch 13 and begin that process... assuming we complete it successfully.