Wells Fargo Took Our Car and Just Now Sent Us a 1099-C


Dear Steve,

Bought a new car had it for almost 2 years and missed just 2 payments as my wife was battling cancer and made arrangement to make those up however Wells Fargo just picked it up not giving me the chance to get it back and never sent me any paperwork even tho I called inquiring about it.

The vehicle was in pristine condition with less than 18,000 miles as I used it to only drive my wife to and from hospital and treatments, but they took it said they were going to sell it at auction and I would receive all paperwork on sale… I never did so, which leads me to my question.

After an additional 2 years, still no paperwork but received a 1099C for a date of 5/21/20 for the tax year 2020 for $3,310.59 of class G canceled debt. How is this allowable when they didn’t even breakdown this amount or what big payday they got from the sale of that pristine car?



Dear Jeff,

I’m so sorry to hear about the medical issues with your wife. I hope things are looking up on the cancer front.

You’ve actually got several different issues here.

The IRS describes a 1099-C Code G as “Decision or policy to discontinue collection. Code G is used to identify cancellation of debt as a result of a decision or a defined policy of the creditor to discontinue collection activity and cancel the debt. For purposes of this identifiable event, a defined policy includes both a written policy and the creditor’s established business practice.”

The 1099-C form is a tax reporting document. It has little to do with your financing agreement or repossession of your car.

We can determine from the form that Wells Fargo does not think the $3,310.59 is recoverable under the definitions of banking regulations or the IRS.

That has little to nothing to do with if they will still try to come after you for that debt.

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If your liabilities were more than your assets in 2020, the easiest way to deal with the form is by filing a Form 982 showing the forgiven debt should be tax-free.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

You can always call the IRS and attempt to open a case requesting a 1099-C correction. Good luck with that.

If you were not insolvent in 2020, you have two choices, pay the income tax on the forgiven debt or attempt to go back to Wells Fargo to get details on the transaction. If you feel as if Wells Fargo did not live up to what they said regarding the vehicle’s sale and disposition and want to push them for answers, it might be a good idea to get an attorney licensed in your state to review the situation.

One place to look for such an attorney is here. You can find one in your state.

Honestly, the easiest way to deal with it at this point will be if you were technically insolvent in 2020 and the IRS Form 982 will work for you when you file your 2020 tax return.

While it could be technically possible for a collector to come after the forgiven debt, I don’t think they will. If they do, talk to that attorney first before you admit to owing the old debt.

There are bad debt buyers who will purchase these old debts and attempt to intimidate people into paying money they don’t have to.

Damon Day - Pro Debt Coach

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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.
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