Cancellation of Debt!

FAQ: If it’s removed off my credit report do I still owe it? 🤔

The answer is simple, if you truly do owe the debt than yes. You’re still responsible for paying it. 😯

This can usually be done by settling on an amount and then paying to have it deleted. ✅

Or by receiving what’s called a cancellation of debt. 😯

Let me explain a 1099c (a charge off or cancellation of debt) is depicted below...

The company decided to give the debtor a 1099c because they want to write it off with the IRS as a tax break. In order to properly do that they have to:

1. Cancel the debt and agree not to go after the debtor anymore. Meaning they can’t collect on the debt because they took a tax break on it... 💥

Most companies would rather not provide a 1099c because if you look in box 6 that is a code for the bureau to delete the debt making it no longer collectible. 😳😳😳

For the one’s that do decide to take the tax break. They told THE IRS they won’t collect so this is why when u have a charge off it may show a 0 balance and if they did sell it to a collections agency to collect.. it’s NOT sold. They have to find someone to collect it besides them.😅

So this is basis enough to have the Debtor have this charge off removed and not collected.. 🤗

Of course the only drawback I suppose here is that a 1099c is viewed as income since you’re having your debt cancelled and you would have to pay taxes on said amount. 🙄

Please consult your tax advisor if you receive one. 🤓

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