Just received two 1099-C's from Citi Bank

[ready2puke]

Hi everyone..haven't posted in a long time..
Still have no filed almost 3.5 years now and have not paid or even talked to a creditor.
Have not been sued yet.. Not sure if I will file or wait out the 4 year SOL in Ca.
Anyway I did get 2 of these yesterday saying Forgiven Debt..well I do know what a 1099 means and I was alittle worried..
I haven't been able to afford my attorney fees as it seems every month I have to use that money for rent.
I called the attorney I have and she said I just need to fill out a 982 form and declare that I'm insolvent. Sounds easy, but I think it'll be a real pain in the tush.
She said that she is seeing alot of banks doing this recently and it'll probably put her out of business.
Now if I can get one for B of A...I might be ok..
The Citi Banks are only 50% of what I owe.
Anyone else getting these?? And what do you all think of this..
R2P

[HHM]

If you have no money for an attorney because of "rent", you are paying too much in rent.

Honestly, if you were serious about resolving the situation, you would have found a way, but something is holding you back, and it is not lack of funds, that is just your "excuse", it is a lack of commitment (denial etc).

However, keep in mind, a 1099-C is not a defacto surrendering of debt, it is merely a reporting document. A lender is required to issue a 1099-C for any forgiven debt in excess of $600. Why you are getting these now is that they are required to issue it if the lender has made no attempt to collect in 36 months. There is a loophole for collections. You can have a 1099-C triggering event (an event that requires the issuance of a 1099-C) without actually triggering the surrendering of the debt. You are encountering that loophole. The original lender, Citibank, since it hasn't taken any steps to collect the debt in 36 months is required to issue the 1099-C under IRS Regs. HOWEVER, that doesn't mean Citi has not already sold the debt to a Junk Debt Buyer to collect.

But the attorney is correct, you will need to file form 982 with your taxes. Also, there is an insolvency worksheet you need to do, each form, surprisingly, is only 1 page.

[ready2puke]

My Biz is really slow right now and has been for many years.

So any rent is going to too much...and yes your are probably right about an excuse but everytime I have the attorney money..I have to dip into it for rent or other bills..
Things are still crappolla in Ca. especially in my biz. I'm in the beauty service business and my income depends on who picks up the phone and wants to spend their money on a skincare treatment or bikini wax.
So are you saying that even if the debt is forgiven by CitiBank and was sold to a debt collector they (the debt collector) can still try and collect or sue me?
The attorney said this was a good thing for me and was happy for me but I'm still on the fence as to if it is.

[HHM]

So are you saying that even if the debt is forgiven by CitiBank and was sold to a debt collector they (the debt collector) can still try and collect or sue me?

It is a risk. I think if they actually tried to sue you, you could offer the 1099-C as a defense. But in reading the IRS regulations regarding this issue, there is a collection loophole in this scenario.

[ready2puke]

Well they would have to do it quick as Ca. does have a SOL of 4years..and in Aug. it'll be 4 years for all my debt..

[karm43]

Thanks i got 1 too citibank original and junk collector name on it. Filing this month so will put in bk cause of loop, correct? Then I won't have to file on income tax?

[keepmine]

Thanks i got 1 too citibank original and junk collector name on it. Filing this month so will put in bk cause of loop, correct? Then I won't have to file on income tax?

You still need to include form 982 with your tax return.

[ready2puke]

And declare insolventcy? Citi knows how to reach me so really don't think they have sued me when you look at my credit report they can tell I'm a lost cause...so I guess you can say I'm judgement proof...
Mine didn't have any debt collectors name on it just the Citi
Also my attorney said it would be double taxation if they (the junk collectors) tried to issue another 1099 after Citi did.

[ready2puke]

Thanks i got 1 too citibank original and junk collector name on it. Filing this month so will put in bk cause of loop, correct? Then I won't have to file on income tax?

Since it was issued before you filed you may still be liable for income tax unless you can prove insolvency..which means basically you have more debt than assets at the time of the 1099-C issue date

[catleg]

Citibank seems to have gone 1099 crazy, maybe it's because of their partial government ownership.
On another forum that I read, it's been reported that Citi is 1099'ing folks for AAdvantage mileage given out with new bank accounts, using a very high $ rate for the mileage (2.5 cents a mile).
No other bank that anybody'd heard of has done this. They haven't done it for credit cards just deposit accounts.
So I sense a nefarious purpose here, some government auditor has apparently told them to crank out the 1099's and "help" uncle sam try and get some more tax money.
Stupid idea it's just going to create major hassles for people and not get them the money they think it will.

[bcohen]

I wish Citibank forgave my credit card debt, rather than sell it to a JDB. It has been sold 3 times now, first to Asset Acceptance, then to LVNV Funding, and now to Midland. I hope I don't get sued by these people, because I can't afford to file BK at this time.

[SMinGA2]

I had to file a 982 on a 1099-C I just received from a creditor. The basic IRS question: just before the debt was forgiven, was the sum total of your debts greater than the sum total of your assets? If yes, you were insolvent and should not have to pay taxes on the forgiven debt.

At the top part of 982, mark that the debt was forgiven (but not part of title 11). Then I think it is option 10A that you select. Attach to your 1040.

[ready2puke]

SminGa2 was it that easy? Seemed like it as my attorney was happy for me..Now if a few of my other cc's would join in..like B of A will wishful thinking.
Did you have to list all your debts and all your assets?
Thanks for any info your the first person that has said they have gone thru it.

[SMinGA2]

At first glance the 982 form might as well have been in latin. Seemed confusing & overwhelming. But in reality, much of it does not apply when you're filing it to claim insolvency.

*Fill in your name at the top. I put Hubby's name, followed by mine as his name is shown first on our 1040. For identifying #, I listed his ss# since again he is listed first.
*Check the box under #1 "Discharge of indebtedness to the extent insolvent (not in a title 11 case)". <---If you get a 1099C for a debt that WAS already discharged in bankruptcy, you'd check the one before it for being part of a title 11 case.
*For #2, fill in the amount of the 1099-C debts for which you're claiming insolvency.
*10a, fill in the amount again for which you're claiming insolvency.

Insolvency means that just before they forgave the debt, you owed more than you owned. Make a spreadsheet and send it with the 982. Something like:

Home Value $X Owed $Y
Car 1 Value $X Owed $Y
Car 2 Value $X Owed $Y
Misc. Credit Cards Value $0 Owed $Y
Student Loans Value $0 Owed $Y
Bank Account Balances Value $X Owed $0
401k Value $X Owed $0
Misc. household items Value $X Owed $0

Total Value $X, Owed $Y <---Assuming $Y is higher than $X by more than the total of the 1099Cs, you're insolvent.

SminGa2 was it that easy? Seemed like it as my attorney was happy for me..Now if a few of my other cc's would join in..like B of A will wishful thinking.
Did you have to list all your debts and all your assets?
Thanks for any info your the first person that has said they have gone thru it.

[SMinGA2]

I have a friend who decided not to file bankruptcy... She used 401k funds and settled some debts for about 25% of what she owed. (In a ch. 13, she'd have paid all or almost all she owed, decided she'd try to settle instead.) She had some 1099Cs to file for 2010 taxes, and so used form 982. She sent it with a spreadsheet as well.