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Can my creditors take my takes. i got a letter saying i will receive a 1099-c form.

Plainfield, NJ |

they said i they will report the principal bal. 6,348 and will not try to collect. I work a half a year about 3,500. i am on unemplyment , no job few hunred $$$ no home live with people. i know i need to do a CH7.Can they take my fed taxes i was hoping to get 600.00 to put on doing a BK.

Attorney Answers 4

Posted

The creditor cannot take your federal tax refund, but you may have to file form 982 showing that you were insolvent at the time the debt was forgiven if you want to avoid paying taxes on the forgiven debt amount.

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3 comments

Asker

Posted

so the creditors did this just to get me back,why would they do this??? if there is no money in it? it seems mean. Thank you!

Alan D. Walton

Alan D. Walton

Posted

The IRS requires the lender to file these forms when the lender determines the debt is no longer likely to be collected. It has nothing to do with you personally.

Asker

Posted

ok thank you

Posted

Creditors can't typically take your tax refund. But the situation you're describing sounds like a third-party debt collector maybe misinforming you about their "right" to collect/report an alleged debt. If this is the case you should discuss with a NJ consumer law/debt-defense attorney to discuss your options, as there could be violations of federal law which would entitle you to economic damages plus attorneys fees. Good luck.

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Posted

File for BK before you get tax refund and exempt the tax refund out with your exemptions.

The previous information is solely for informational purposes only. If you have further questions, please contact an attorney in your area for more specific answers. Responding to your question in no way creates an attorney/client relationship, and none of the specific guarantees of privacy exist. If you have found this information helpful, kindly check the "helpful" box.

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Posted

Creditors can generally not take a tax refund (except the IRS and federal student loan lenders). The lender is threatening to file a 1099C, which could decrease your refund due to an increased tax liability for forgiven debt.

Please note that I am not admitted to practice outside of the States of New York and New Jersey. Anything stated by me in this forum is for general informational purposes and is not intended to be taken as attempting to practice law in any juridiction in which I am not licensed. Further, the reading of these answers is merely for informational purposes only and does not create an attorney-client relationship absent the signing of a retainer agreement.

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