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What do I do about a 1099-C I received on a debt discharged in bankruptcy?

San Diego, CA |

I had a credit card account with Chase Bank, which had the wrong first name on the account (despite my writing and calling to ask them to fix it, they never did), but everything else is correct and it was my debt. When I lost my job I filed bankruptcy at the end of 2009 and the debt was discharged in January 2010. The Chase credit card was included on my list of creditors, so they were notified, but because of the different first name issue, continued to ignore it and any other collection agency they assigned also continued to ignore the discrepancy. Chase has now sent me a 1099-C, -- do I have to pay tax on a debt was discharged? How do I show insolvency? I don't have money for an attorney or an accountant so I'll be doing it on my own, so any help is greatly appreciated. Thank you!

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Attorney answers 5


No, this debt was discharged in bankruptcy, so the bank lost their chance to claim it as a debt that has been forgiven. So you don't have to pay taxes on this 1099C. However, if you have a tax preparer, be sure to let them know this info because there is a tax form that will need to be submitted so that the IRS doesn't get confused. Hope this perspective helps!


See the blue hyperlink below to a Avvo legal guide.


My clients usually contact the creditor directly, inform them that the debt was included in bankruptcy and discharged, and ask them to reverse the 1099.

Gary D. Bollinger

Gary D. Bollinger


I am unfamiliar with "reversing" a 1099. Is that filing an amended 1099 or a cancellation notice?


You will want to include with your return form 982 to alert IRS that this debt was discharged in a title 11 case and therefore should not be considered taxable income.


You just need to file IRS Form 982 showing that this debt was discharged in your bankruptcy. That will eliminate the tax. A copy of that form, that you can fill in and print out and then file with the IRS along with your tax return, is provided here:

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