Re: Credit Card Charge-offs then Bankruptcy
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Posted by Last Dime
(216.29.165.114) on January 08, 2003 at 10:47:05:
In Reply to: Re: Credit Card Charge-offs then Bankruptcy posted by Robert M on January 08, 2003 at 00:47:45:
Thanks very much for your answer. I read somewhere that when a bank charges off or writes off the CC account, it is required by federal tax law to send a 1099 to me (and the IRS) stating the amount of the cancelled debt. Cancelled debt is considered income on which federal income tax is due. But I also understand that federal law says that if you are "insolvent" (more liabilities than assets, even if not formally in bankruptcy), there is no need to pay income tax on the cancelled debt. Have you or anyone else out there had any experience with the IRS in which a 1099 was sent and there was a dispute about whether income tax was owed on the cancelled debt? Thanks again for your help.
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