Legal Question in Bankruptcy in Texas

I declared Chapter 13 Bankruptcy in August, 2002. I paid it out at 100 cents on the dollar to every creditor who filed a claim, and the bankruptcy was dismissed around June, 2005. A couple of creditors who had not filed a claim sent me a 1099-C Cancellation of Debt in 2005 and I paid applicable taxes that year. I just received a 1099-C from another creditor who had not filed a claim. It indidates that the debt was cancelled on 10/31/2009, more than 4 years after the bankruptcy was discharged. Is this allowed ? If so, for how many more years can creditors from 2002 continue to submit a 1099-C ? Is there no statue of limitations or limit to the time they can file ?


Asked on 2/16/10, 10:49 am

1 Answer from Attorneys
Keith Engelke Law Office of S. Keith Engelke

You need to find an attorney who practices bankruptcy tax law.

I do not.

However my understanding is that there is no tax on debts discharged in bankruptcy.

You may not be able to obtain a discharge of a debt if the creditor was not notified of your filing. You will need to contact your bankruptcy attorney to determine if the creditors who filed the 1099-C's were properly notified.

If the creditors were not properly notified, or discharged, then they could cancel the debts as non payable. If the creditor cancelled the debt, this would create a bad debt deduction for the creditor and income to you.

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Answered on 2/21/10, 1:01 pm


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