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Thread: 1099-c

  1. 04-18-2011, 11:24 PM #1
    BIGTONY1213
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    Default 1099-c

    My credit is already BAD and I am fighting to pay what I can.. last week I got a 1099-c for an entire debt from HSBC ( 5000 ). I know I will have to pay taxes, but the debt is gone. I know its not a way I want to handle my debts, I want to pay them off.. Would anyone consider this a little gift ?
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  2. 04-19-2011, 03:03 AM #2
    kita
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    If it was offered and not asked for, I would consider it a gift of forgiveness and save for the taxes.
    Go West Young(ish) (Wo)Man,
    Let your troubles stay east.
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  3. 04-19-2011, 04:18 AM #3
    Greebo
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    I don't understand the question.

    HSBC clearly settled your debt with you - and reported it to the IRS.

    What is there to consider a "gift"? They reported it as "income" (money you borrowed that wasn't repaid) that you "earned" from them.
    If you could kick in the pants the person responsible for your problems, you wouldn't be able to sit for a month.

    Did you know that a 4 year student paying $20,000/year who finances their education graduates with over $103,000 in debt to start? But a student who works and pays cash and takes 6 years to graduate ends with $6,300 in their pocket! So much for "getting a head start by financing!"

    Greebo    (Nerd Spender): Loving and extremely patiently tolerated husband of ceashels.
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    Three     Two mortgages, two one no car loans, one no credit cards, and a partridge in pear tree!
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  4. 04-19-2011, 11:15 PM #4
    mehjun
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    If I understand you correctly.
    You still owe $5000 to HSBC. You wanted to pay them back, but they canceled the debt and send you 1099-c.
    If I were you then I would take that 1099-c and pay my taxes and forget about this $5000 and consider it as a gift.
    Baby Step 1: Done (Jan 2011). $1500 in EF.
    Baby Step 2: Working on this. My debt is now down to $10K from $57K in Aug 2008.
    Baby Step 3: Not started.
    Baby Step 4: Stopped.
    Baby Step 5: Not started.
    Baby Step 6: Still rent a house.
    Baby Step 7: I wish I was here now.
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  5. 04-20-2011, 07:01 AM #5
    ladytoysdream
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    When a unpaid bill is reported to the IRS, it is then treated as income by the IRS and you will end up paying income taxes on the $$ amount of the bill that was forgiven. So the debt on this bill is now settled.
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  6. 04-20-2011, 09:07 AM #6
    BIGTONY1213
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    I know I have to pay taxes, I was just making a comment.. I did want to pay and they did not give me a chance and wrote it off.

    I know it is not the noble thing to do, am I wrong feeling a little relieved... One less..

    Thanks to All
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  7. 04-20-2011, 09:13 AM #7
    Ceashels
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    I would feel relieved by it. Even though you were not in on the decision making process it is probably a good thing in the long run. When you are back on your financial feet... pay it forward.
    The Free Spirit Saver who walks the path with Greebo.

    Onboard with a modified Dave Ramsey Plan
    Budget: "Every month! On paper, on purpose!"


    Gardening somewhere between Zone 6b and 7a.
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  8. 04-22-2011, 02:20 PM #8
    Anna43
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    Talk to your tax preparer. If you were insolvent at the time the debt was written off, you probably will not have to pay taxes on the $5,000. I don't know IRS criteria for insolvent, but if you owe more than you own sounds reasonable to me. Of course, the IRS isn't known for being reasonable.
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