Re: I'm so confused !!!!
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Posted by Paul
(18.104.22.168) on April 29, 2004 at 00:46:01:
In Reply to: I'm so confused !!!! posted by Jer on April 28, 2004 at 23:06:56:
If they issue you a 1099c, then they can’t deduct the amount you do pay against their income, only the amount they are ‘forgiving’ and as such you are liable for the tax consequences on the ‘forgiven’ portion. They only keep the full tax write-off (minus whatever pennies on the dollar they get) when they throw the account out in the garbage to the pennies on the dollar debt buyers. This tax loophole where they get to deduct the loss against their taxes while the debt is STILL collectible by the garbage agencies is what makes the pennies on the dollar debt buying collection agencies effectively tax subsidized welfare queens that no one should ever pay. However, we shouldn’t complain too loudly about this loophole, since without it, Original Creditors would be MUCH more likely to sue rather than take their tax savings and run from the accounts like they do now.
By the way, a 35% settlement from an Original Creditor is an EXCELLENT settlement if it includes a 1099c. It is the lowest settlement any OC will make. It is so low that it means that Chase has deemed you ‘judgment proof’ and they won’t ever be suing you. Also, if you are insolvent, then the tax consequences of a 1099c are zero. A 1099c is a ‘good’ thing since it means the account is closed forever and no one can ever collect on that amount.
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