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. 🤓

1 view

Text

T: 401-267-8436

F: 401-337-7157 

CS: 833 976-6684

© 2020 by Mr Then Consulting LLC All rights reserved. Carlos Ariel Then

255 Main St. Suite 201 

Pawtucket RI 02860

  • YouTube
  • LinkedIn
  • Instagram
  • Amazon
  • Facebook
  • Twitter
Sat 9-3pm EST
Mon, Thur, Fri 9-6pm EST

FICO and “The score lenders use” are trademarks or registered trademarks of Fair Isaac Corporation in the United States and other countries.