I’m Stressed About This 1099-C for a Repossessed SUV


Dear Steve,

In 2010 I returned a 2008 armada due to loss of income because spouse became unemployed.

In 2018 I received a 1099 c for $12,000. IRS has sent a letter telling me that I might owe them $2600 for the cancellation of debt.

Is there any way to get around this because its really stressing me out? Thank you in advance.



Dear Oscar,

It is a stressful situation when you have to deal with the old debt that resurfaced. Not a fun time.

So here is how you can deal with this.

The first step is to determine when the debt was written off. If you received a 1099-C in 2018, then it might have been written off in 2017. Or you might have received the form early in 2018 for a write off in 2018. The form will give you the facts.

It does not sound like there is any dispute you turned in the Nissan Armada. The vehicle appears to have had a finance agreement associated with it when the vehicle was turned in; the finance agreement resulted in a deficiency.

You are just lucky they didn’t sue you over that.

So the 1099-C is letting you know the creditor reported the discharged debt as a loss. You will probably have to go back and file an amended tax return for the year the 1099-C applies if you did not report it on your taxes filed for that year.

However, if you were insolvent in that year, meaning your liabilities exceeded your assets, you may be able to waive the tax liability. You will need to fill out IRS Form 982.

If you don’t have a tax adviser that you use, one option might be to purchase TurboTax to do your amended return and opt for the CPA adviser option. At least you would be able to talk to a tax professional and ask your questions.

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You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

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