Legal Question in Credit and Debt Law in Tennessee

I received a 1099 saying I am required to file it with my 2011 tax return for unsecured debt by a creditor which i defaulted on in 2007 due to hard economic times. I received no notice that the creditor went through any legal measure to warrant unsecured debt. Is this an illegal debt collection practice?


Asked on 2/02/12, 2:10 pm

1 Answer from Attorneys
Howard R. Peppel Peppel, Gomes & MacIntosh, P.C.

This is really not an effort to collect a debt; however, it is a matter that can cause you some problems with the Internal Revenue Service if you do not claim the amount on the IRS Form 1099 as income for calendar year 2011. In very general terms, whenever there is a liquidated debt, namely one that is specific in amount, and a creditor "writes off" the debt, such can be deemed as taxable income to the debtor.

Without knowing any more specifics about the situation, I strongly suggest that you consult with a tax advisor as to whether or not you actually have to claim this amount as income for the past calendar year.

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Answered on 2/04/12, 9:00 am


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