HV Ken Posted February 10, 2014 Report Share Posted February 10, 2014 Client came in with a 2013 1099-C from a bank for forgiveness of credit card debt from 10 years ago. Client went bankrupt 10 years ago and hasn't has or used a credit card since. Is this really something they can do? No statute of limitations? Quote Link to comment Share on other sites More sharing options...
Carolbeck Posted February 10, 2014 Report Share Posted February 10, 2014 I do not think they can do this if your client officially filed for bankruptcy and the Credit Card company that sent this 1099-C as one of the Creditors within the bankruptcy. Depends on what chapter he filed. I believe if he filed under chapter 7(or Chapter 13 - Do not remember) he was scheduled to repay some of the debt, perhaps he did not keep his part of filing? If not, he needs to let the Credit Card Company know of this fact. A lot of banks and credit card companies changed ownership during the "Great Bailout", could be records were not recorded correctly. JPMorgan Chase took over quite a few and they received a lot of $$$ in Bailouts. Bank of America too. Sorry I could be of more help! Carol Quote Link to comment Share on other sites More sharing options...
Mr. Pencil Posted February 10, 2014 Report Share Posted February 10, 2014 No statute of limitations? Yeah, it's ten years in my state. And that just means they can't sue to recover, but the debt is still owed. What you need to do is read the bankruptcy order. Just because he filed BK doesn't mean this particular debt was discharged. On the other hand, debt collectors are not particularly credible, so it's worth checking out. 1 Quote Link to comment Share on other sites More sharing options...
HV Ken Posted February 10, 2014 Author Report Share Posted February 10, 2014 Thanks for the info Carol and Mr. Pencil. Quote Link to comment Share on other sites More sharing options...
Lee B Posted February 10, 2014 Report Share Posted February 10, 2014 What if he acknowleged the debt post bankruptcy by making a payment. Quote Link to comment Share on other sites More sharing options...
Max W Posted February 10, 2014 Report Share Posted February 10, 2014 Yeah, it's ten years in my state. And that just means they can't sue to recover, but the debt is still owed. What you need to do is read the bankruptcy order. Just because he filed BK doesn't mean this particular debt was discharged. On the other hand, debt collectors are not particularly credible, so it's worth checking out. It is 10 years for a judgement. Credit cards are 3 or 4 years depending on the state of origin of the card. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted February 11, 2014 Report Share Posted February 11, 2014 As to the actual tax treatment this year, I would report it on Line 21 [for matching reasons] but then offset it as nontaxable, since you already know that had it been received when it should have been, it would have been non-taxable due to his insolvency, even if not discharged by the Bankruptcy. Quote Link to comment Share on other sites More sharing options...
HV Ken Posted February 11, 2014 Author Report Share Posted February 11, 2014 As to the actual tax treatment this year, I would report it on Line 21 [for matching reasons] but then offset it as nontaxable, since you already know that had it been received when it should have been, it would have been non-taxable due to his insolvency, even if not discharged by the Bankruptcy. Interesting - where would you do the offset? Quote Link to comment Share on other sites More sharing options...
SFA Posted February 11, 2014 Report Share Posted February 11, 2014 I also had a client bring in a 2013 1099-C for a credit union debt that was supposedly discharged in bankruptcy several years ago. Client is going to check with the attorney that handled the bankruptcy to see why this may have slipped through the cracks. Client said that his reason for filing was primarily because of his debt to this credit union. Something is not right. We will get to the bottom of this. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted February 11, 2014 Report Share Posted February 11, 2014 Interesting - where would you do the offset? Also on Line 21. Quote Link to comment Share on other sites More sharing options...
verbanik Posted February 14, 2014 Report Share Posted February 14, 2014 Don't forget to file the form 982 Quote Link to comment Share on other sites More sharing options...
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