Get Out of Debt Guy - Steve Rhode

I Want Charged Off Debts Removed From My Credit Report. – Edward


“Dear Steve,

I have 2 credit card debts that total $30,000 that have not been paid in 4 years and the banks have written them off. 1 bank has already sent me a 1099 form last year and I already settled that tax debt with the IRS. I have no intention of paying these debt offs, since they drop off my credit report in 3 years and I have never gotten a collection call or letter in 3 1/2 years. I do not have anymore credit cards and plan never to have anymore for the remainder of my lifetime. This is the only debt that I have never paid-off in my credit lifetime, it is business related.

I want to my debts removed from credit report, especially the 1099 debt. Since this was declared as income by the bank, and I paid the IRS, this debt has been settled. Any advice what I can do or say when I write the credit agencies to have these removed?


Dear Edward,

Wish and want all you want, it doesn’t work like that. Even though a debt has been charged off and reported as 1099 income it does not make the debt either settled or paid. In fact a 1099 debt can still be collected and sued on. A 1099 statement does not nullify the debt.

A third circuit bankruptcy case recently decided that Form 1099-C does not establish that debt is discharged. A creditor typically issues a Form 1099-C to a debtor in bankruptcy to show cancellation of debt. The credit union in the case In re Bononi, had sent the Chapter 7 debtor zero-balance account statements and an IRS form 1099-C for “cancellation of debt.” After receipt of the form and the account statements, the debtor received money from the settlement of a personal injury action.

The court found that despite the statements and the 1099-C form, the debtor still had an obligation to pay on the past debt. Additionally, the court found that even if a creditor issues a 1099-C form, the form does not prohibit the creditor from pursuing collection of the old debt. Only a discharge from the Bankruptcy Court has the effect of canceling the debt and removing the debtor’s liability for the debt. In re Bononi, 19 CBN 864. Source

Your credit report is like a report card in school. Just because you got a D in some class does not mean it gets removed if you latter retake the class or don’t like the grade.

I can’t see any reason why the credit bureaus would even consider removing this accurate but negative item.

And while I’m piling on the bad news, this debt can be attempted to be collected on for the rest of your life. The only limitation is that they may not sue past the statute of limitations and that will be decided by your state law.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!
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