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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Debt consolidation- help- another ??? at the bottom of the pg.
Posted by kahlua716
If the collections agency doesn't validate the debt what exactly happens on your credit report.
I have a friend who works for the IRS and she said that if a debt is cancelled or deleted, you could be responsible for paying taxes on it (and the interest) because technically it's income seeing as you didn't have to pay.
from her email:
The thing with the "deleting" of credit, is that - as far as I know - it's a cancellation of debt, and Will will end up with I believe they are 1099-C's to put on next year's tax return. The cancellation of the debt counts as income because technically, since you never paid for what you bought, that debt is counted as income. (Which means, anything that is cancelled with come to him on a 1099-C, he'll have to put it on his/your tax return, and then you'll be paying TAX on it.)
Anyone know anything about this?!
If they already marked your credit report (and you know its been well over 30 days since they first contacted you)... then it's too late to validate the debt. Try to settle on an amount and get it in writing that if you pay they must remove all the negatives off your report.
It's not like once a collection agency gets your debt they immediately go and mark your credit report. That is ILLEGAL.
They typically send you a letter saying the account is in collections and you have thirty days to dispute the debt. If you don't dispute the debt that's telling them you are guilty and then they can mark your credit.
If within those 30 days you dispute the debt with a DV letter... they CANNOT BY LAW mark your credit until they validate the debt in writing. And even if they validate the debt they cannot mark your credit until you repspond to the validation.
If you requested validation and they go ahead and trash your credit report, you can sue them and collect on a $1000 violation thats part of the law AND collect on any damages you suffered from them marking your credit and lowering your scores (like if you were denied credit on a mortgage or credit card).
As far as the 1099 goes... I wouldn't worry about that unless they actually issue the 1099. If they issue it, then yeah it would be in your best interest to include that on your tax form. You will only pay tax on money you "saved" from the CA. It's not that big of a deal.
Message edited 2/13/2008 12:47:00 PM.
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Posted 2/13/08 12:41 PM  |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Debt consolidation- help- another ??? at the bottom of the pg.
Posted by kahlua716
Also- I was just reading that the collections agencies (in their initial attempt to collect the debt) give you 30 days to ask for verification after the 30 days they assume the debt is valid. In DH's case, this 30 days has past a few times over- can I still go ahead with the debt verification letters?
If they haven't marked your credit report yet, you can still try to dispute the debt. It doesn't hurt. You could always say you never got the initial credit letters from them.
But if your credit report is already marked with a collection, its a more difficult situation.
The whole point of disputing the debt is to temporarially shield and protect your credit report from collection agencies.
ETA: here is a good read
Debt Validation - The Ultimate Weapon Against Collection Agencies
Message edited 2/13/2008 12:48:43 PM.
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| Posted 2/13/08 12:44 PM |
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kahlua716
3 Girls for Me!
Member since 8/07 12475 total posts
Name:
Keri
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Re: Debt consolidation- help- another ??? at the bottom of the pg.
When reading all this stuff about Debt Validation- I came across some info that says that sometimes collections agencies tack on huge interest fees and other charges that I don't legally have to pay.
For this reason I may check for Validation- not because I don't believe DH owes them money, but because I want to be sure we are only paying what we are legally obligated to pay.
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| Posted 2/13/08 3:08 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Debt consolidation- help- another ??? at the bottom of the pg.
Posted by kahlua716
When reading all this stuff about Debt Validation- I came across some info that says that sometimes collections agencies tack on huge interest fees and other charges that I don't legally have to pay.
For this reason I may check for Validation- not because I don't believe DH owes them money, but because I want to be sure we are only paying what we are legally obligated to pay.
They can't charge interest on a debt they can't validate or legally collect on. 
They can threaten to charge you interest all they want in an attempt to scare you into paying them. What they can actually do by law is a different story.
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| Posted 2/13/08 6:25 PM |
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KLSbear
LIF Adult
Member since 1/06 1908 total posts
Name:
Karen
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Re: Debt consolidation- help- another ??? at the bottom of the pg.
On a side note, a couple people at work have been taking advantage of the fact that gold is at an all time high. One co-worker's daughter took what she considered to be junk - some old rings, chains, etc. and got over $300 for it. Another rounded up some stuff that she thought would bring about the same and she got over $700 for her unwanted gold jewelry. Might be an option to pick up some quick cash to help pay off some of the bills if you have anything you don't want, like old class rings from high school, necklaces you'll never wear, etc.
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| Posted 2/13/08 6:31 PM |
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happydays
LIF Adolescent
Member since 8/06 513 total posts
Name:
working my way to 1000 posts!
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Re: Debt consolidation- help- another ??? at the bottom of the pg.
I dont think this is always the case. My DH had a lot of debt when we met and I helped him get it under control. We made a lot of deals with each place. I always asked for a paper that stated he was paid in full and fulfilled his obligation. Thiis was about 5 years ago, when his credit score was 620. The last time we ran his credit report was in the Fall of 2007 and his credit score is excellent and now better than mine. On his credit report, all of them listed him as being paid in full. I also helped my niece about 10 years ago and I did the same with her and they honored the discounted price (as in if we paid today we only had to pay $400 vs the $600 and they cleared it off her credit report. )
I recommend working with the CC companies...it helps it really does.
Posted by njbound07
to my understanding, it is better to pay off the full amount vs. asking to pay a "settlement amt". It'll reflect on your credit as such. This was something that I did years ago. then 4 years after paying the settlement amt. it still reflected as such which had a negative impact on my score. I spoke to Experian & they advised me to go and pay the old debt in full.
E.g. if my total debt balance was $600 and the collection agency said we'll take off $140 so that I would pay $460 & that's what I did.. but then after a few years I went back & paid the $140 and it helped my score trremendously. I would just work out a payment plan with them. Every paycheck send them a set dollar amount.
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| Posted 2/13/08 10:51 PM |
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