I Got a 1099 for a Debt Care One Was Settling for Me. – Ilene

“Dear Steve,

I recieved a 1099 C from a bank credit card that I purchased in 2008. I lost my job and could not pay it until 2010 and I put the card on Care One which is a debt settlement service. I lost my job again in 2010 after paying to care one for a full year. They turned it over to the IRS and I do not know what to do at this point !

Since the account has been discharged what would be the best thing for me to do to not have to pay so much taxes?


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Dear Ilene,

Actually what we have here is a number of different situations. The first is the 1099. A 1099-C is required to be issued by a creditor when debt of more than $600 is written off. That’s a tax reporting function and really has nothing to do with the debt itself. A debt that was reported on a 1099 can still be collected. It does not forgive the liability for the debt. Unless the statute of limitations has expired for you in your state for that debt, you still owe it.

If you are insolvent, you may be able to get a waiver for your tax liability. See How to Deal With a New 1099-C Issued on Old Debt Using Little Known IRS Form 4598.

You will want to pay attention to filling out IRS Form 982.

Regarding the 1099-C, it is entirely unclear from your question when the creditor reported the forgiven debt in relation to when the debt was written off. If it was reported late you can see that same story about IRS Form 4598.

Please post your responses and follow-up messages to me on this in the comments section below.

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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