Legal Question in Credit and Debt Law in Massachusetts
credit card was ''settled''
I paid a credit card off for less than what was owed. The collection agency siad this would settle the account. They had already tacked on alot of interest & fees. I asked several times if this would end my relationship with this creditor and would no longer hear 'anything' from or about the creditor-they replied yes. This was last year, and now I have received a 1099 C. When I called to question it, the collection agency said 'I didn't ask, so they didn't have to tell me' is this true? And doesn't settled mean just that? The collections agent said the 1099 C is because it was income I have to pay on. I do not agree, it was interest & fees-I feel I paid the income portion when I paid it off.
3 Answers from Attorneys
Re: credit card was ''settled''
The issue is whether or not the creditor's discharge of your indebtedness constitutes gross income within the meaning of the IRC Sec.61, or whether it falls within the 9 various exceptions to the rule. The answer is fact specific. Please feel free to contact my office for a free initial consult based upon the facts of your specific situation.
Re: credit card was ''settled''
On a write off, this is not rare.
Re: credit card was ''settled''
Under the Internal Revenue Code, forgiven debt is considered 'income' to the debtor.
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