Subscribe to our mailing list

X

I’ve Been Settling My Debt and I’m Worried I Might Get a 1099-C

By on December 12, 2018

Question:

Dear Steve,

In 2013 I bought a house, which was wonderful but financially straining. I was living a very frugal life and getting by ok. In 2016, however, a situation happened at work where I ended up working extensive overtime hours for months at a time (without extra pay because I am salary) and it took a toll on my physical and mental health.

This led to a downward spiral of living less frugally and creating a “head in the sand” situation for me since my only focus was on catching up with my work.

During this time, I fell behind on pretty much all of my unsecured debt and was unable to catch up before things went to collections since the minimum amount owed kept growing each month that I missed a payment.

I’ve been on payment plans with the collectors and am now in a position to start settling accounts one by one, but I wasn’t sure how this would affect my taxes.

I have settled debts with three different collectors this year to close out some of my debts and move on with my life. The amount I “saved” for each debt was under $600 but the total amount is over $600. Will I receive a 1099-C?

Sincerely,

Elizabeth

Answer:

Dear Elizabeth,

The trigger for a 1099-C is not the cumulative amount of debt forgiven but how much per creditor.

I’d love to know how much each of these debts was before you settled them and saved less than $600 per creditor.

Can you please give me some feedback in the comments below?

morehelp1
Choice1 Choice2 Choice3 Big Hug!
Get Out of Debt Guy - Twitter , G+ , Facebook
If you have a credit or debt question you'd like to ask just use the online form .

READ  My Wife and I Divorced But We Both Got a 1099-C For an Old Debt. What Now? - Steven

Last step, fill out the information below or call us for Priority Assistance.

What problems are you having with your report?

Your first name is required. Your first name is required to be at least 2 characters. Your first name cannot be longer than 50 characters.
Your last name is required. Your last name is required to be at least 2 characters. Your last name cannot be longer than 50 characters.
Your email is required.
Your phone is required. Your 10 digit phone number is required.
Your state is required.
Your age is required. Your age must be greater than 18. Your age must be less than 100.

By clicking on the "Contact Me" button above, you consent, acknowledge, and agree to the following: Our Terms of Use and Privacy Policy and to receive electronic communications. We take your privacy seriously. That you are providing express "written" consent for Debt.com or appropriate service provider(s) to call you (including through automated means; e.g. autodialing, text and pre-recorded messaging) via telephone, mobile device (including SMS and MMS - charges may apply), even if your telephone number is currently listed on any internal, corporate, state or federal Do-Not-Call list. Consent is not required as a condition to utilize Debt.com services and you are under no obligation to purchase anything.

By clicking on the “Contact me” button above, you consent, acknowledge, and agree to the following: (1)That you are providing express “written” consent for Lexington Law Firm, Debt.com or appropriate service provider(s) to call you (including through automated means; e.g. autodialing, text and pre-recorded messaging) via telephone, mobile device (including SMS and MMS – charges may apply), or dialed manually, at my residential or cellular number, even if your telephone number is currently listed on any internal, corporate, state or federal Do-Not-Call list; and (2)Lexington Law’s Privacy Policy and Terms of Use and Debt.com’s Terms of Use and Privacy Policy. Consent is not required as a condition to utilize Lexington Law or Debt.com services and you are under no obligation to purchase anything.

About Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

4 Comments

  1. Elizabeth

    December 13, 2018 at 9:58 am

    Thanks Steve!

    The first one I settled was with FMA Alliance (originally Lending Club). I started with a balance of $2,717.36, made monthly payments until it was down to $792.62, then settled for $452.92.

    The second one was with National Credit Adjusters (originally Rise).I started with a balance of $2,074.09, made monthly payments until it was $488.09, then settled for $366.06.

    And then just recently I settled with Midland Credit (originally Credit One). I started with a balance of $813.04, made monthly payments until it was $500, then settled for $400.

    I’ve had opportunities to settle for more, but have never had a lump sum large enough to take advantage of it.

    Thanks again, and I’m glad to see you have a new podcast out!

  2. Elizabeth

    December 12, 2018 at 5:10 pm

    Asked question.

Share a Comment / Leave a Reply

%d bloggers like this: