Rec'd 1099 from creditor discharging $21k card debt; will IRS tax me on unearned income? I've $7 til next payday. I can't do anything, and I'm afraid they'll prosecute me, and ask for prison time. I'm beyond panic stricken. I'm ill and a senior citizen. Will bankruptcy discharge this debt now that it's reported to IRS? Have about $33k outstanding debt; I've made no payments since '09, and have not been hounded. Options?
Personal Injury Lawyer
There is no "debtor's prison". Not being able to pay your debt is not a crime. You should speak with a bankruptcy attorney to determine your best course of action.
Please be advised my answers to questions does not constitute legal advise and you should not rely on it, due to the fact that we have never met, I have not been aprised of the facts in you case nor have I reviewed any documents.
Chapter 7 Bankruptcy Attorney
Please, relax. You are OK This is NOT going to be a problem. If your only income is SSDI, then you don't owe any income tax. If you do file a tax return for the year for which you got the Form 1099, all you need to do is attach the Form 1099 and a Form 982 to your return. The form is available everywhere, including your public library.
The IRS is not going to prosecute you. And yes, this debt the original creditor is dischargeable in bankruptcy. And since you do not really owe any taxes to the IRS, you don't have to worry about discharging the IRS in bankruptcy.
This answer is not intended to create an attorney-client relationship and may not be relied upon as legal advice. A careful examination of the facts is necessary before a legal answer may be relied on. You should consult your own attorney before taking or refraining from any legal action.
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You are insolvent, so send in a form 982 along with a return and the 1099. Because your only income is SSD, you are immune from garnishment. Send the IRS the form to take care of them, make sure the state taxing authority is also told of your insolvency, and relax.