{"id":1282,"date":"2013-09-27T17:08:48","date_gmt":"2013-09-27T17:08:48","guid":{"rendered":"https:\/\/www.busby-lee.com\/?page_id=1282"},"modified":"2023-04-25T07:20:22","modified_gmt":"2023-04-25T07:20:22","slug":"1099s-for-debt","status":"publish","type":"page","link":"https:\/\/www.busby-lee.com\/1099s-for-debt\/","title":{"rendered":"1099’s for Debt"},"content":{"rendered":"

If you cannot repay money owed , then creditors have the ability to issue a 1099, if $ 600 or more are forgiven from the debt by the creditor. \u00a0Under the Mortgage Debt Relief Act of 2007 , you can exclude from your income a 1099 issued on your principal residence, if the loan secured was less than $ 2 million as a couple or $1 million separately. \u00a0If you have defaulted under credit cards or have the case of\u00a0repossession of personal property or vehicles, then the creditor is obligated to issue a 1099-c for Cancellation of Debt if the forgiven amount is more than six hundred dollars. \u00a0Most creditors in Texas will not issue the 1099 until they have reached the 4 year mark for the Texas breach of contract provisions to bring the suit. \u00a0In Texas, if you default under a contract, the window to bring a suit to seek judicial relief is four years. \u00a0 During this 4 years, if the creditor is attempting collection, then they have not forgiven the debt, after the 4 years, you have an affirmative defence to the collection of the debt and Texas courts could not give relief. \u00a0For national credit reporting purposes, the debt can be reported for up to 7 years. \u00a0But if the creditor issues the 1099, then it should not longer be reported on your credit report. \u00a0The effect of receiving the 1099-C is that the amount forgiven is treated as income and you have to pay taxes on this forgiven amount.<\/p>\n

Exclusions to 1099-C income<\/h2>\n

Exclusions<\/a>\u00a0exist to the 1099-c income tax which are:<\/p>\n