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From the Experts at

Will a 1099-C Hurt My Credit Score?

Advertiser Disclosure by Gerri Detweiler

Will a 1099-C Hurt My Credit Score?

If you are one of the unlucky taxpayers who have received a 1099-C form reporting “cancelled debt income,” you may wonder whether a 1099-C would affect your credit scores.

The answer is “no” — and “yes.”

A 1099-C is a tax form that the IRS requires lenders to use to report “cancellation of indebtedness income.” This form must be filed in certain circumstances where more than $600 in debt is cancelled, or goes unpaid for a certain period of time. The lender files this form with the IRS and a copy is supposed to be sent to the taxpayer as well. A copy of the 1099-C is not supplied to credit reporting agencies, though, so in that respect, the fact that you received the form has no impact on credit reports or scores whatsoever.

Does that mean you don’t have to worry about your credit when you get one of these forms?

Not exactly. The event that triggered the 1099-C — unpaid credit card debt, a foreclosure or short sale, vehicle repossession, for example — almost certainly has been reported on your credit reports. In some sense, then, the damage has already been done.

As we’ve explained in other articles, there is a great deal of confusion around these forms. Sometimes they are issued for the wrong amount or in the wrong year, and you, the taxpayer who gets one of these forms, has to try to deal with those inaccuracies.

That’s where your credit reports can come into play. They can be a valuable source of information when you are dealing with a 1099-C. Check your free credit reports to help determine:

When the lender claims you defaulted on the debt. One of the main ways consumers avoid paying taxes on cancellation of indebtedness income is by claiming the insolvency exclusion. To do that, they need to compare their liabilities to their assets right before the debt was cancelled. Your credit report can help jog your memory about when your credit card was charged off, for example, or when your vehicle was repossessed. You may need those dates when filling out the insolvency worksheet in IRS Publication 4681.

It can also be helpful in situations where a creditor is issuing a 1099-C for an old debt. We have received numerous complaints from consumers that they have received these forms for debts that were written off years ago. If the credit report shows that a debt was charged off six years before a 1099-C was issued, that may be useful in helping to establish that the 1099-C was issued in the wrong tax year. (Generally a 1099-C must be issued for the tax year an identifiable event, like cancellation of the debt, occurred, or after three years of no substantial collection activity.)

Whether a debt was included in your bankruptcy. Another way consumers avoid paying taxes on cancelled debt is by letting the IRS know they discharged that debt in bankruptcy. While your bankruptcy discharge papers are the best way to confirm which debts were discharged, you may have put away your bankruptcy papers and have trouble finding them. If so, your credit report should list the date your bankruptcy case was filed and discharged, as well as indicate which accounts were included in your case.  That information can be useful while you try to track down your paperwork. (You may have to request it from the bankruptcy court if you did not keep a copy.)

Because a 1099-C is issued as a result of a problem paying a debt, it’s helpful to obtain your free annual credit reports. This can assist you in understanding the dates and amounts listed on one of these forms. Once you have dealt with the cancellation of indebtedness income tax issue, consider checking your free credit scores to see how your credit has been affected. You can do this using’s free Credit Report Card.

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • Gerri Detweiler

    Technically the 1099-c and the credit report are two separate issues. The IRS requires a 1099-c be sent in certain situations, but they specifically say that it doesn’t mean the debt can’t or won’t be collected just because a 1099-c has been issued. How is the account listed on your credit reports? As a judgment or collection account? If so then it doesn’t really matter since a zero balance on those accounts isn’t likely to help your credit scores anyway.

  • Gerri Detweiler

    I am sorry I don’t understand the situation. You paid it off but the credit union said you still owed debt? When did that happen? Did you dispute it at the time? And when was the 1099-c filed? Did the IRS contact you? Who is telling you to find old paperwork? Please be as specific as possible so I can direct you to the right resources.

  • Gerri Detweiler

    You’ve got a bunch of problems here: the 1099-c/IRS (do you owe taxes), the reporting issue (is it correct?) and the deficiency (could you be sued?)

    On the 1099-c issue it may be that they sent it too late since the state statute of limitations had expired. I’d suggest you read this article: The Little-Known Form for Avoiding a Big Tax Bill

    For credit reporting purposes it sounds like they are reporting the wrong date if it was really charged off in 2008. I’d suggest you either talk with a consumer law attorney or file a complaint with the Consumer Financial Protection Bureau.

    And with regard to being sued it sounds like you will have to cross that bridge if you come to it.

    Keep really good records throughout this process – what you disputed when – and and records you can dig up showing what happened in 2008.

    Let us know how it turns out.

    • tay

      I’ve been receiving calls from a collection agency regarding a 1099c filed in my name. They verified my last 4 social security number. I just asked who were they looking for. The representative was very rude so I didn’t validate who I was. I haven’t received anything in the mail from the irs regarding this issue are that collection company. What should I do? I dealt with a collection company in the past and they were not professional nor reporting that I was making payments. My account was sold multiple times to other companies. So I’m weary to what I shall do in this case. I have no knowledge of what the debt is.

      • Gerri Detweiler

        Tay – This sounds scammy. If they did file a 1099-c they would be required to send you a copy. It sounds to me like they are trying to use that threat as leverage to get you to pay a debt that may not even be legitimate. Insist they put it in writing. 9 Signs You Are Talking to a Debt Collection Scammer

  • Gerri Detweiler

    Try filing a complaint with the Consumer Financial Protection Bureau. They seem to be doing a great job helping consumers. Will you let us know what happens when you do?

  • Gerri Detweiler

    I assume this account is reported as a charge off or collection account. Is that correct? If so then unfortunately getting the balance zeroed out probably won’t do much, if anything, for your scores since the main factor is the negative payment status of the account. After seven years it must be off your report and you are approaching that time frame in just two years. You may get better results by focusing on building better credit.

    • DanGan

      According to the BBB reply “A 1099-c is sent for any principal forgiveness of 600 or greater, we are also required to report the status as having been charged off and settled for less than full balance”

      But this was in 2009, so they never reported it as being charged off they reported it as being still owed. This has been preventing me from persuing any new bank accounts or abilities to really bring my credit score up.

      I thought their reply was a win for me, even if a small one, since it does show that I don’t owe it….. Right?

      It’s been almost 6 years, does this update from mean it’s going to sit on my credit score for another 7 years from now?

      • Gerri Detweiler

        I still can’t picture how this is being reported. I’ll email you.

  • Gerri Detweiler

    It all depends on how the creditor reports it on her credit reports and I have no idea what they’ll decide. There is no specific reporting category that I am aware of for forgiven debt so it might be reported as settled…? She will have to check her credit reports and see ,and if she believes the way they report it is inaccurate, she can always dispute it.

  • SoCal949

    I love how companies like American Express send a 1099-C which under tax code is “forgiveness of debt” but then illegally retain the debt internally and on your credit report. They got nailed by the Consumer Credit Agency for doing this but are back doing the same thing all over again. Legitimate use of 1099-C makes the debt zero since they wrote it off and that is the purpose of the 1099-C. If you still owe it or the balance is retained in any way, then it is incorrect. Problem? No severe penalties against creditors like American Express for doing so.

  • Gerri Detweiler

    It is counted as regular earned income at your tax rate for that year. But you may be able to avoid taxes onit if you are insolvent. Now – when you are settling – is the time to fill out the insolvency worksheet. We give more instructions in this article: 1099-C In the Mail? How to Avoid Taxes on Cancelled Debt

  • Gerri Detweiler

    We talk about disputing a 1099-c in this article:
    The Little-Known Form for Avoiding a Big Tax Bill. She may also need to file an identity theft report theft with local law enforcement to provide the creditor.

  • Gerri Detweiler

    Not that I am aware of.

  • Gerri Detweiler

    That’s a tricky one. Technically the fact that they send to a 1099-C doesn’t necessarily mean that there is no balance. There are a number of actions that can trigger one of these forms, and according to the IRS it is not proof that the debt has been erased. However, there are some consumer law attorneys who have taken that position in court successfully.

    You could certainly try to dispute the debt on your credit report and see if you can get it updated to a zero balance. You may not see a big boost in your credit score though, since the fact that it was charged-off/repossessed can still remain for a total of seven years. And it’s that payment history that affects your credit scores more than the debt itself.

    A Step-By-Step Guide to Disputing Credit Report Mistakes

  • Kevin Haney

    I had a vehicle repossessed in 2009, I am buying a house and Toyota is sending me a 1099 c, will this remove the debt from my credit report?

    • Gerri Detweiler

      No. Repossessions may be reported for seven years from the date of repossession. Why are they sending you a 1099-C five years after the fact? Has there been any collection activity on the debt? If not you may want to challenge it – it’s quite late to be sending that form. We wrote more about that here:
      The Little-Known Form for Avoiding a Big Tax Bill

  • Gerri Detweiler

    The IRS says that the issuance of a 1099-c does not necessarily mean the debt is forgiven. Whether or not Capital One can still collect depends on the statute of limitations in your state, among other factors. I know some consumer law attorneys are using the issuance of a 1099-c as a defense against the debt. You may want to consult a consumer law attorney to find out if you still have to pay this debt. If you are having trouble finding an attorney you can find one through the website of the National Association of Consumer Advocates.

    Another thought – is it actually Capital One trying to collect or a collection agency? How long ago did you default and what state do you live in? The debt may be outside the statute of limitations.

  • Gerri Detweiler

    No idea – have you tried contacting them? I’d love to hear what they say.

  • denalla

    I received my credit report as we are trying to buy a house and there was a credit union that had canceled an old debt about 5 years ago. I never recall receiving a 1099-C yet I know that they did report it as my accountant notified me that I had to pay additional taxes due to the canceled debt. It still shows as unpaid balance on 2 of the credit bureaus, and closed on the other. Is there any way to get a copy of the 1099-C so I can begin fixing this?

    • Gerri Detweiler

      Your accountant should be able to tell you how to request the wage and income transcript for that tax year. But you don’t need it to dispute the balances. You can still do that directly with the credit reporting agencies.

      However, if you have a mortgage loan in process do not do anything without talking with your loan officer. Here’s why: How a Credit Report Dispute Could Stop You From Buying a Home

  • Kevin Goughnour

    So I called a lender yeaterday and asked for some kind of paperwork for a debt that was forgiven last year. They replied that they would not be sending any to me. I’m a little hesitate about filling my taxes. Any thoughts?

    • Gerri Detweiler

      You are supposed to report cancelled debt regardless of whether you get the form or not. One option would be to see if you qualify for the insolvency exclusion. (IRS Publication 4681 has the worksheet.) If you do, simply file as if you received the form. If you don’t, then you’ll have to decide how you want to proceed. If they later file a 1099-c you can amend your return.

  • Gr8ful Becca

    I received a 1099-c? from bank of america for a charge card. I am still being pursued by the debt collectors. When I asked debt collectors for balance and an itemized statement of payments, they told me they didn’t have to and then sold the debt to another of their agencies. These are all operating under the same parent company. This particular debt shows up on all 3 credit reports with DIFFERENT agencies trying to collect. What are my choices of action, if any. This was filed on my tax returns last year. Another question. If I were to marry does my partner take on my debt before we get married? Is there any way I can protect him from my debts?

    • Gerri Detweiler

      With regard to the 1099-C, have you tried filling out the insolvency worksheet in IRS publication 4681? If you qualify for the full exclusion you may be able to avoid including that amount in your taxable income.

      As for the collection agencies, you may either want to talk to a consumer law attorney or file a complaint with the Consumer Financial Protection Bureau. Refusing to validate the debt and/or to sell it when you dispute it may not be legal. It’s worth at least exploring that.

      As for bringing your husband into this, I wrote about that here: Could Your Spouse’s Tax Problems Affect You?

  • Gr8ful Becca

    I also used the insolvency worksheet last year when i got this notice.

  • Archpeg

    I sold a home thru short sale last year. I have not received any documents regarding taxes, loan paid off, etc. I normally complete my taxes myself before mid February. If I receive a 1099c do I have to pay taxes on this? Is it too late to declare bankruptcy as I do not have any funds to pay taxes on 20,000 of forgiven debt?

    • Gerri Detweiler

      Have you used IRS Publication 4681 to see if you qualify for the full insolvency exclusion or the Mortgage Forgiveness Debt Relief Act exclusion? If you do then you won’t have to worry about considering bankruptcy.

      If not, please talk with a tax professional asap to find out whether bankruptcy is an option at this point.

      • DJCapo

        If you receive a 1099c from a credit card that was charged off in 2008 from tx…and there was never a settlement made..could you advise the statue of limitations to be able to file an exclusion..

  • dr j

    I received a 1099 c from Bank of America. I looked at how much I may be getting back from my tax return this year on a tax refund estimator. Will that charge come out of the refund I may be getting

    • Gerri Detweiler

      You’re not quite thinking of it correctly. They don’t just subtract that amount from your refund. The amount shown as canceled debt on the 1099-C is considered income and you add it into your taxable income before calculating your refund or what you owe. However, if you qualify for the insolvency exclusion you will be able to exclude part or all of that amount from your taxable income.

  • C Bond

    Once a 1099-C has been issued (by Chase in this instance), do they need update the reporting to the credit bureaus of a zero balance. Chase is saying that they don’t have to update my credit report and can leave the past due balance reporting. I can’t seem to find any information of this specific topic.

    • Gerri Detweiler

      This is a really good question – and a controversial one. I need to do some digging. Hope to respond in more detail soon.

      • JAR

        I am curious if you ever found the answer to this question. I am in the same scenario and would like to know if I can get the credit bureaus to show a zero balance.

        • Gerri Detweiler

          Working on it – not so easy to track down!

          • Bob

            I have to find a lawyer for this very thing because while trying to refinance my home, this is the only thing holding it up. I thought I would be closing this week but the bank needs evidence that this Chase account is no longer a liability. My 1099-C and last years tax return showing that I did in fact claim the debt amount as income wasn’t enough for the underwriter. That balance is still there, and I don’t know what’s gonna happen now. I’m bummin’.

          • Gerri Detweiler

            What state are you in?

          • Bob


          • Gerri Detweiler

            I am researching this issue.

          • igm

            I am also having the same problem, has there been an answer to this?

          • Gerri Detweiler

            IGM – I emailed you.

          • michelle

            I am in the same situation in Oregon. I dont even know where to start!! The debit collectors for Chase changed so often I could never get the same person on the phone and they refused payments. Only a lump sum and 2 weeks to get it plus they said a 1099c would be filled for the difference. This has been going on since 2008 and we are just now getting a 1099C. I just want to know how to move forward and get it off my credit! Chase is HORRIBLE to work with.

          • Gerri Detweiler

            Bob and JAR – no definitive answer. Chase says they continue to report a balance on a charged off account since that’s what the consumer owed. It would be helpful for me to see this tradeline on your reports. I will email you.

        • April

          I too am in the very same situation. Is there any info for us?

          • Gerri Detweiler

            Chase has responded that this is the way they report. I am looking into the issue from other angles but I don’t expect to have news for you in the short term unfortunately. I am still investigating however.

    • Gerri Detweiler

      It’s an interesting question – and a somewhat controversial one. I need to do some digging. Can you give me a little more info? Was the debt charged off? When? Has there been subsequent collection activity?

  • larry

    I had a 2nd mortgage canceled by HFC because I had been struggling with payments. I did not make any payment in 2014, tried to contact them in November to make arrangements. They notified me the loan had been canceled, lien removed in August. I never received any paperwork from them after June. In february received a form 1098 but no 1099-c. They informed me the loan was discharged 4 years ago in my bankruptcy and they were not sending me a 1099-c. Forget about it. How can they do this, how do I inform the iRS? Can they come after me 5 years from now?
    What can I do to protect myself?

    • Gerri Detweiler

      Debt discharged in bankruptcy is not taxable and they don’t have to send you a 1099-c. Are you saying you didn’t discharge it in bankruptcy?

      • larry

        They say it was discharged from the bankruptcy4 years ago, but I was told mortgages cannot be discharged so I continued paying primary and second. HFC said I didn’t need to pay the 2nd mortgage but they would continue the lien until it sold. When they canceled in August they released the lien. But still no 1099-c. Should I assume one will show up in 2-5-9 years? My accountant says to get a copy of the lien release, and just hang onto the file. Thanks for replying.

        • Gerri Detweiler

          Does your attorney say you discharged the debt or not? (Mortgage debt can be discharged in some cases, and especially in the case of second mortgages.) Sounds like that’s key. If not then did you qualify for the Mortgage Forgiveness Debt Relief Act exclusion? I wish I had a simple answer but some of these situations are quite complicated unfortunately.

          • larry

            Hi again Gerri, I will check with the law firm. I was not told if it was discharged or not. I was told mortgages can’t be discharged. But the thought that the 2nd mortgage would stick around as a lien for 20-30 years didn’t work either. So I continued to pay (in distress) hoping to pay it down, or off. If it was discharged, and is now canceled with no lien just seems too easy.

  • Ryan

    I received a 1099-C in the mail for debt that I’ve never had. I called the bank that the debt is supposedly with but they had no record of the debt either. My social is on the form and address, but a business name that doesn’t exist instead of my name. Any advice on trying to figure this whole thing out. The bank who supposedly sent this has been zero help.

  • MF

    I short sold 2 homes in 2014. One was an investment property and one was a primary residence. Each house had 2 loans (primary and secondary). The investment property sold in Feb/2014 and so far I recieved a 1099C from the second lien holder but not the first. The first lien holder was SPS. SPS informed me yesterday that they were sending one and that the debt was forgiven.

    The second house (primary) sold in June/2014. So far I spoke with Navy Federal Credit Union and they are not sending me a 1099C b/c the debt was forgiven. I haven’t spoken with Chase (lien holder number 1) yet.

    Does this seem accurate? 4 total loans, so far only one has sent me a 1099C and the two have told me that they weren’t sending them.

    What do I do???

    • Gerri Detweiler

      It’s great you are being proactive about this and not just hoping they forget about you. We’ve heard from so many taxpayers who get these forms years later when they are much more difficult to deal with.

      (BTW I don’t quite understand the response from the credit union. If the debt is forgiven they must send out a 1099-c.)

      You can report cancelled debt without a 1099-C but it can be difficult in this kind of situation to know exactly how much to report.

      Honestly if I were you I would consult a tax professional who is really familiar with these forms. They can become quite complicated, especially for rental properties. Hopefully the tax professional will help you come up with a strategy!

  • Gerri Detweiler

    We are writing a story on that – will post a link soon.

    • Helen Menser

      I do have same problem,hopefully that story will explain things to me .thank you

  • Janet

    I tried to reply to a conversation about this particular topic but for some reason couldn’t… So, Chase is standing firm on their position that the debt is still owed to them even though a 1099c was issued, they took the benefit of a loss, & I paid taxes on the debt/income. I cannot find one case where a court judged that a debt can be both canceled AND due. The way I see it, I may not have personally paid Chase the balance of my debt but the US government certainly did through the write off. Please, please correct me if I’m wrong. I sent letters to both CFPB & my state’s attorney general regarding the matter. The debt was canceled in Sept 2013. I included the amount on the 1099c on 2013’s return. It is still showing as a collection account with the full amount due AND Chase is reporting it as past due, missed payment EVERY MONTH. Sigh…

    • Gerri Detweiler

      Janet – I will email you.

      • Rachael

        I am literally dealing with the same issue except Chase cancelled the debt in March 2014 and I am filing a 2014 return. I don’t mind paying the taxes on the debt but they said that I still owe the entire balance. I really do not understand how this is legal. I want to clean up my credit and even if I considered paying off the debt, I would pay taxes twice and they would receive double the benefit.
        What should I do?

        • Gerri Detweiler

          Rachael –

          To be fair, they are following current IRS rules which may required a 1099-C even before a debt has been cancelled (see IRS publication 4681, identifiable event code H). Basically you need to first find out if you qualify for an exclusion such as the insolvency exclusion, and if you do claim it using IRS form 982. If you don’t, and you wind up paying taxes but later pay back some or all of the debt, you will have to amend that return. My best advice at this point is to keep really good records of everything you do here. The IRS is going to change this requirement (remove code H) – it just hasn’t happened yet.

      • Chad Campbell

        I’m in a similar boat with Chase, but thankfully they have at least stopped reporting on it. This was just brought to my attention as I’m trying to get a mortgage. The debt still shows a balance on my credit report even though it’s both listed as charged off and canceled. I received my 1099-C for the 2012 tax year. I’d be interested in knowing more about how Janet’s situation worked out before trying to engage Chase.

  • Gerri Detweiler

    Currently the IRS position is that the issuance of the 1099-C does not necessarily mean the debt is cancelled. That’s because under current IRS regulations one of these forms must be filed if there is an identifiable event which includes no meaningful collection activity in the most recent 36 month period. This is going to change, but under current regulations it is possible that a 1099-C can be issued even though the debt isn’t necessarily cancelled. You have to look at the statute of limitations to determine whether it’s possible for the creditor or collector to still try to collect.

    • monica martinez

      so do i still owe to the collection agency even if i paid taxes on the debt after receiving a 1099c?

      • Gerri Detweiler

        I tried to answer that question as best I could in the previous answer. I can’t answer definitively unfortunately. Some collectors have tried to collect from consumers after a 1099-C was issued though some consumers have successfully challenged them on that in court.

        Do you have a creditor or collector coming after you for a debt where you received a 1099-C? Do you know if the statute of limitations has expired?

        • Monica

          I believe statute of limitations is 6 years i minnesota I had a foreclosure in 2011 i received a 1099c on my second mortgage. Just yesterday I was contacted by a collection agency. Mortgage company says I am good with them and my credit report says zero on that debt

          • Gerri Detweiler

            You certainly have the right to dispute the debt with the collection agency. Ask them to send you written notice of the debt, then you can request verification of the debt. You can let them know in writing that you received a 1099-C and paid taxes on the debt, and that you spoke with the creditor who confirmed the debt was forgiven. Then you can see how they respond. If they still try to collect, it may be worth talking with a consumer law attorney.

  • rachel

    My husband received a 1099c for a credit card. I’m not sure if it is the same one he had a settlement for and paid off or if it’s a different one. If it is the one we paid the settlement, do we have to include it in our income?

    • Gerri Detweiler

      It doesn’t matter which one it is (as long as it’s accurate). Either way, the IRS expects you to include the amount of cancelled debt as taxable income unless you can show that you qualify for an exclusion. More info in this article: What is a 1099-C? Your Top 11 Questions Answered

  • Erwin

    We completed a short sale on a home in 2013. I never received a 1099-C from the lender. I received a copy of the Wage and Income Transcript from the IRS and it shows the lender submitting a 1099-C with the following: date of cancellation, property FMV at $300K, amount of debt discharged $120K, interest forgiven amount $0.0, identifiable event code by Agreement. I’m trying to get a copy of the 1099-C from the lender so I can somehow fix this matter. Will I be hit for back taxes owed in 2013 since I did not include it when we filed taxes. I’m hoping we qualify for the Mortgage Debt Forgiveness Act of 2007.

    • Gerri Detweiler

      If you qualify for the exclusion then you should be able to handle it by letting the IRS know why you didn’t report that income. (If you don’t qualify for that one, you may qualify for the insolvency exclusion.) This article may help as well:
      Help! I Did My Taxes Wrong

  • Mike

    I do not have a income at all and I received a Cancellation of Debt for 700$, what do I do? Do I file the 700$ even though my income is $0?

    • Gerri Detweiler

      If this income does not put you above the threshold where you must file a tax return then my understanding is you don’t need to file.

  • donewitit

    I had a car repoed last year in January this year I received a 1099c (cancelation of debt) to file with my taxes that I have already filed. Why do I have to pay taxes on this plus I still owe them the money?

  • Richie Rover

    I had a vehicle repossessed back in 12/2012. The remaining amount owed
    Is 6,292.00. I offered to settle for 3,500.00 to wipe the slate today and they accepted under the
    Condition that they report It as a settled for less on my credit report and send me a
    1099c form to file it with my next tax return. Does that sound right? Thank you for any

    • Gerri Detweiler

      It sounds like a reasonable deal. Make sure you get all details in writing and keep copies for your records. It would also be a good idea to go ahead and fill out the insolvency worksheet now in IRS Publication 4681 to figure out if you will have to report the cancelled debt as income.

  • Dan

    I received a 1099-C in 2013 for credit card debt owed to Chase. The identifiable event code was G for “decision or policy to discontinue collection.”

    Chase is still attempting to collect on this debt. It is my understanding that this debt has been forgiven, not merely charged off, and that I no longer owe it. Is this correct?

    Thank you so much,

    • Gerri Detweiler

      It’s a tricky issue. The statute of limitations might be more helpful here in determining whether they can still collect. Nevertheless, if they stated that was the reason they issued the 1099-c and now they are trying to collect you might want to try to challenge their attempts to collect. Is it a collection agency you’re dealing with? Have you tried disputing it?

  • Vman77fl

    I received a 1099-C for credit card debt. The Moderator says that receiving a 1099-C doesn’t mean the debt is cancelled. I question this from a legal perspective. If you pay taxes on wages earned (1099-C) how can you have an outstanding debt at the same time. This does not make logical or legal sense. If you have earnings, they are not a debt. Hence, once a 1099-C received for a credit card debt, then the derogatory on the credit report should be erased, as it is no longer a debt. Wages earned, taxes paid. So, has a tax attorney ever addressed the issue on this board?

    • Gerri Detweiler

      Yes, I’ve interviewed both CPAs and tax attorneys (and debt collection attorneys). It specifically relates to the identifiable event code H. It is confusing and questionable, though, and so much so that the IRS is going to do away with the 36-month testing period. It just hasn’t happened yet. I am writing an article on that as well.

  • Amarily M

    I received a 1099-C I did loan modification on my principal home, is this correct? When I did not have a short sale or foreclosure and the most important, do I need to pay taxes?

    • Gerri Detweiler

      If they forgave some of the balance in your modification than the IRS does require them to file a 1099-C. However, you may qualify for one of the exclusions we explain in this article: 1099-C In the Mail? How to Avoid Taxes on Cancelled Debt

  • MM

    I received a 1099-C for a foreclosure. I am using Mortgage Forgiveness Debt Relief Act (reason: primary residence). How will I know if IRS will accept the amount I claim to be wiped off? Will they send a letter or notification?

    • Gerri Detweiler

      If you qualify for the exclusion there’s no reason to be nervous. But save any paperwork or documentation if they do come back to you later to question it. (They won’t send you a letter saying it’s been “accepted” though.)

  • Courtnie Presnull

    I received a 1099C for a repossessed vehicle. I know the statute of limitations has expired on the vehicle and the debt tax has been paid in full to the IRS. Is there anything I can do about removing this from my credit reports? I am trying to straighten out my credit so we can buy a home.

    • Credit Experts

      Courtnie —
      The statute of limitations and the length of time something can stay on your credit reports are often not the same. It can be confusing. This post, we hope, will help explain it: Does Your Old Debt Have an Expiration Date?

      • Courtnie Presnull

        Thank you for the reply. I understand there are two different dates to follow. The SOL (Texas) is 4 years and of course the debt time period for reporting is 7.5 years from date of last activity. The DOLA is 1/2009 while the original account was opened in 3/2007. Does this mean that I must wait until 1/2009 to request the debt be removed from my credit report even though the account was considered a cancellation of debt, and the tax has been paid through the IRS for said cancellation of debt?

        • Credit Experts

          It would be 7.5 years from the date of last activity before it would automatically drop off your credit report — so July 2016.

  • Gerri Detweiler

    Beth – We just posted an article about this:

    Help! An Old Credit Card Is Stopping Me From Refinancing

  • Gerri Detweiler

    We just published a new article on this topic: Help! An Old Credit Card Is Stopping Me From Refinancing

  • Gerri Detweiler
  • C Khan

    I received a 1099C from BofA due to modification of our primary home loan in 2012. A year and a half after BofA sold the loan to Nationstar. Then NationStar again sent me 1099C in 2014 for the same amount. Is that normal?

  • Gerri Detweiler

    It’s hard to say because identifiable event code B covers a variety of actions (receivership foreclosure). I wouldn’t suggest relying on it as sole evidence that a debt is no longer collectible. Instead, I would encourage you to talk with a consumer bankruptcy attorney in your area who can help you understand your rights and responsibilities for this debt.

    • lemmecomplain

      Thank you, Gerri!

      • Gerri Detweiler

        You’re welcome.

  • Cindi Emrich

    Once you claim a 1099-C on taxes, does the debt come off your credit report, report a zero balance or does the balance remain as owed?

  • michael mizell

    I filed a 1099-c cancellation of debt with this yrs taxes. Question is is can they still report stuff to credit bueros?? I still see them sending monthly things to the credit bueros. If not what do I do to stop them?

  • Jack Meov

    I received a 1099-C in 2011 and included it in my taxes. The creditor still shows it with a balance on my credit reports. This seems incorrect to me.

  • Richard

    my mortgage sent me a 1099-c I filed it with the irs, that part is not a problem my problem a question is.
    The charge off was 48,000.00 The mortgage co said that money will stay on my mortgage balance and come off over a 3 year period. This is preventing me from selling my house now rather than in 3 years. Can they do that?

  • Brian D.

    I borrowed $150,000 from a family member over about 3 years. Last year the family member said I did not have to pay them back. These loans were not in written form and were not from a lending institution, so no IRS notification was made. Am I obligated to report this amount on my tax return?

  • Chesha

    I had a debt back in 2008 for a credit card. I was unable to pay it and we consolidated our debts to be paid off. After some research in early 2011, I noticed I had gotten a 1099C from a Bank in the amount of approximately 26,000. We claimed the 1099C and paid the taxes on it in 2011. I went to refinance my house and that debt is showing on my credit. How do I resolve this issue, do I need to pay the Bank back, they said they had no intentions of collecting and that is why the 1099C was issued.

    • Gerri Detweiler

      We wrote about that in this story:
      Help! An Old Credit Card Is Stopping Me From Refinancing

      It sounds like the dates may be crucial here. If you defaulted back in 2008 it should be close to coming off your reports (depending on what’s being reported when…)

  • Andy

    What if I received a 1099-c after the tax deadline has passed it says for tax year 2014 but I just got it in the mail today 8/8/15

    • Gerri Detweiler

      I definitely should have been sent by the creditor earlier this year but the fact that they sent it late doesn’t mean it no longer applies. You’ll need to figure out whether you owe taxes as a result and amend your return accordingly. This article may help: Help! I Did My Taxes Wrong

      As for the creditor’s failure to send it to you in a timely manner, you can file a complaint with the IRS which may penalize them for failing to file in a timely manner.

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  • Meet Our Expert

    gerri_detweiler GravatarGerri Detweiler is's Director of Consumer Education. She focuses on helping people understand their credit and debt, and writes about those issues, as well as financial legislation, budgeting, debt recovery and savings strategies. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of
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