1099-C IRS Cancellation of Debt and Debt Forgiveness

Be aware, you may not have to pay tax on the forgiven debt, the IRS 1099-C that you just received in the mail from your old mortgage or credit card company.

It is that time of year, tax season, April being the cruelest of months; even harsher than the freezing weather here in Philadelphia is receiving of the Cancellation of Debt form.  Many people have received an IRS form 1099-C from their mortgage company.  Others have received the 1099-C from Bank of America, Wells Fargo, M&T Bank, Citi, Sears, credit card retailers and other creditors concerning the cancellation of credit card debt.  I fear that many people are reporting this debt on their tax returns and paying tax unnecessarily.  Whether you have mortgage debt cancelled or credit card debt cancelled, you have a serious tax issue that needs professional attention.  I have client’s who have received 1099-C’s for $95,000.00 in Montgomery County real estate mortgage cancellation;  no tax was due; but you must report it on your tax return in the proper fashion.

There are many factual circumstances that you would NOT HAVE TO PAY INCOME TAX on this forgiven debt.  You may have to pay the tax but in many, many instances you will not have to.  You must get advice.  This blog is NOT ADVICE to not pay tax; I advise to have a specific meeting to determine the right course of action.  There are laws, rules and regulations that apply to these situations.  A qualified bankruptcy attorney with knowledge of the Tax Code. the IRS and its interpretation of the law can best give you the advice you need.

We end up representing people who are and have been under the financial pressure for months and years.  The previously tried debt settlement and negotiation on their own.  Our clients know their rights and obligations; we use the law to defend them in ways that many, many people do not know.  One of the issues in Montgomery, Bucks, Delaware, Chester Counties and the Lehigh Valley is debt cancellation and the 1099-C.  If you received this form, you need advice; make an appointment to see us.  Bring your financial documents with you.  This is a special consultation; you will receive information you can use in preparing your tax return to save a SUBSTANTIAL amount of tax.  The charge will be $250.00 to review and answer your questions.  This tax season especially, forgiven debt and its cancellation is an issue facing many Americans.  People have suffered long and hard during the Great Recession.  I urge you not to roll over at the whim of the credit card companies and mortgage companies.  Loosing your home or suffering collectors’ calls and lawsuits was indignity enough!!!  Take action now!  Fight back!  MAKE SURE you do not have to pay tax on that cancelled debt.  215-822-2728