I'm usually good about knowing a lot of stuff regarding credit/credit reports/debt collection, etc. so my friend asked me about this today and I have no idea about this. Here's the story: My friend got a call from a company by the name of CRA, I have never heard of it before. He said they said it is not an acronym for anything so I'm not sure what it is. He said they stated they are not a collection agency or or any type of business like that but it appears that's what they are doing. They reported that he has an old debt with Citibank on a MasterCard he opened about a decade ago. He said they stated the original credit limit on the card was $1,000 but the ending balance was $1,400 yet the balance he owes is $3,415 with fees, interest, and other add-ons. He said they stated the account was opened in 1999 and the last payment was made on the account sometime in 2002. He said they stated they are going to file a 1099-C form with the IRS today. He said he could settle this debt with them today for $503.12 by 5:00 PM EDT, and apparently they're still not a collection company and the form will not be filed. The person he spoke to said that because of his tax rate, that he would be liable for about $1,500 on his tax income. He said they told him that if they file the 1099-C this will stay on his credit report for the next 15 years but if he settled they will report to all 3 bureaus that it is paid balance. He told them and me he does not remember this card/debt at all. He said he asked them to mail some kind of verification on the debt but they said 20+ mailings had already been sent out and they cannot send another and were going to process this form right away unless he agreed to settle. He has moved several different times between places since the date the account was opened so it is possible he could have missed those mailings if they were actually sent. I know there are many of you here with knowledge of debt collection, taxes, legal aspects, etc. What if he does not settle the debt with CRA today? Why can they not or why will they not send him some type of verification on the claimed debt he owes? If the company files the 1099-C with the IRS, what does that mean when tax time rolls around in early 2010? What if he decided to settle the debt with CRA without some type of verification the debt is actually his? Will the debt truly be settled or will some type of zombie debt come back to haunt him? Is the amount he does not settle for sent to some other collection agency, company, filed with the IRS another way, etc.? He said while on the phone he never agreed or verified the debt was his own but did verify an old address was his and I said that's good because it could have possible reset the SOL if the debt is his but I don't think saying you used to live some place resets it. He said that he got the company's contact information (phone number) and told them he was going to research the debt to see if he could verify it himself. This has got him real worried and at a pretty stressful time in his life as he finally got back into school but his wife lost her job 2 weeks ago among other things. Like I said, I'm usually good with these types of situations but I have never heard of the 1099-C form at all, especially in debt collections. Anybody have any advice? Thanks in advance.
Personally, I would ask for documented proof that I owe this debt and not just some random caller's word. Here is a copy of the 1099-C. http://www.irs.gov/pub/irs-pdf/f1099c.pdf
I'm calling bull. I've gotten plenty of threatening messages from debt collection companies. All of them had two things in common. They must be settled before 5:00 that given day, and they all base some sort of threat or make it seem urgent.
if he has his old credit card statements showing a paid balance on the card from 99 he should be fine. More importantly CRA has to show validity of the debt via a letter and more than just a phone call with an address. He has usually 30 days from the time he gets the letter to dispute the date. Its up to CRA to show proof that the debt is his and up to him to send any bank statements/letters to prove that the debt is not his during that time. that 1099-c form is more of a write off thing i think for agencies if they are in anyway legit he should be receiving a letter from them showing validity of the debt if he has to he can give them a current address if they claim to have sent a letter at the old address. they have to send him a letter at a current one. edit: if he doesnt have any statements or proof that the account is not his/has been closed with a zero balance then it may get a bit tougher Lil Pun--shoot me an email through the board I can get more exact details for you if you need it, but it maybe on Monday and not today.
This sounds shady as hell. He can probably sue this company under the FDCPA at $1000 per violation if he plays his cards right.
Lil' Pun. My advice is that until they can prove the debt is his, he doesn't owe them a thing & he shouldn't pay them ANYTHING. If this debt is real, then the collection agency (despite what they say, they ARE a collection agency) probably paid a couple of hundred dollars to own this debt & now they'll take the $500 because it is still a profit for them. But first, make sure he doesn't agree to ANYTHING until the debt is proven to be his. If he truly owed this money in the first place, he would remember it. A 1099-C is a debt forgiven worksheet filed with the IRS from a bank/creditor that simply says that a debt was forgiven. If the amount of debt was over $600, then the IRS consders the amount forgiven as income and will add that to your income on your income taxes. Tell him to remember that collection agencys often will toe the line of the law and often break it. They will lie and say anything to get a payment. He needs to call them when he's got questions or needs to talk to them, but he should just let the phone ring when they call to harrass him. have him read this article: http://www.creditinfocenter.com/wor...ction-agency-issue-a-1099-c-for-settled-debt/
These guys are truly the scum of the earth. The fact that he is saying he is not a debt collection company while he's on the phone trying to collect a 10-year old debt should tell you the kind of imbeciles you're dealing with... If I were your friend, I would insist on getting the name of the guy calling along with the name of his company. Then I would tell him that if I ever got another call from anyone in his silly little excuse for a company again, I would report them to the Federal Trade Commission.
It's bullsh!t. After seven years, they can't do anything to you and it's off the credit reports. Companies buy up old debt for pennies on the dollar and then try to get you to pay using all sorts of shady tactics. There's a company out there trying to get me to pay a Bally's contract that I abandoned EIGHTEEN years ago. I recently had my reports pulled to buy a house and it's nowhere on there.
He said he did just that but they claimed they are not mailing him anything. He said he wanted validation that the debt was actually his but they refused except by phone. He said they even said he seemed unconcerned and blamed him for the bad economy? What I think is the 7 years plus 6 month time period is rolling around and if I recall correctly, the original creditor must stop reporting after that time period and debt collectors cannot report it either.
It sounds like total BS to me. If it were me and they called again, I'd tell them not to call me again and if they do I'll report them. Before I do that, I would ask them if they would pay a total stranger $500+ on a debt that they have no recollection of if some total stranger called them out of the blue.
I wouldn't even argue with them. Just coldly and composed, tell them to never call again or you're reporting them to the FTC. http://www.ftc.gov
I'm almost sure he does not but I will check. As stated before, they are refusing to show him proof except tell him over the phone. I did some quick Google searching and if I am reading correctly, only financial organizations can file a 1099-C such as banks, credit card companies (usually banks), mortgage companies, etc. This did not include debt collectors. Is that assumption right? They refused to do this. Done.
He has their phone number. Should he try to call them back and get some additional information to report them?
the 1099-c form is usually for banks I've had to prepare data to give to banks for their 1099-c forms at the end of the year. As far as I can remember the company I work for never filled any out themselves
I wouldn't even bother. Just wait to see if the guy ever calls back. He really shouldn't worry about it. That's what those scumbags WANT him to do. They play on people's emotions.
I've tried to tell him that, even though the 1099-C thing threw me for a loop but like I said it's just a bad time for him right now to be paying anybody money.
sent you a response but basically if the form is filled out then the IRS can forgive the amount of money he paid towards the settlement/payement of his debt as taxable income for the year i believe up to 600 dollars
