You need to take the 1099-C to your CPA or accountant who will know how to handle it with the IRS. There is a Form 982 which he/she will prepare that advises the IRS that you should not have to pay any income taxes on the "forgiven debt" because you received a discharge in bankruptcy. Bankruptcy is one of the exceptions to people having to pay income tax when a creditor forgives , settles, or writes off a person's debt. Remember that the IRS will receive the 1099, so do not ignore it.
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I agree with my colleague. The banks have been doing this lately.
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Take this 1099C to a tax preparer ASAP along with your bankruptcy petition and your Discharge notice. If you did NOT reaffirm the debt, it was wiped out in the BK. Good luck.
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Can a bank issue a 1099-C after bankruptcy....
1. Is it legal, yes.
2. Is it an error, no.
3. is it required, no.
If anyone actually reads the instructions and IRS regulations regarding 1099-C's, you will learn that a lender is not "required" to issue a 1099-C on debt discharged in bankruptcy, but it is not forbidden from doing so. As such, it is NOT an error.
A 1099-C is merely a reporting document. All it does is tell the IRS that a potentially taxable event occured. If you recieve a 1099-C, and assuming the debt was discharged in bankruptcy, the debter need only file IRS Form 982, check box 1(a), write the amount in box 2, and bam, no tax liability on discharged debt.