Need 1099 C and chapter 7 filing advice. Please help!!!!!

[bigmomma78]

I retained a lawyer to file my Chapter 7 Bankruptcy back in March 2011, but I never finished filling
out my paperwork and I never turned it in. I have been mulling over
whether I really want to file and trying to figure out a way to
possibly settle my debt with my creditors. I did pay the
retainer in full. Anyway I'm writing today because I have received
several 1099C from a couple creditors with whom I had unsecured credit
card debt. I'm assuming I have to file these on my taxes? Does
receiving these 1099C mean the debt is discharged and they won't come
after me for it anymore? Also, what is the statute of limitations on
unsecured debt in Virginia? So I am asking if you think I should go
ahead and file (if it is not too late) or if I should try to settle
with my creditors (usually for 1/3rd of the debt-I owe around $32,000,
so I was hoping if I could come up with $10,000 to settle it
possibly). My question for you is what is my best option at this
point? Would it be wiser to settle, and do I settle with the
creditors that I have not received a 1099C from? What do I do about
the people from whom I have received a 1099C? Any help you could give
would be greatly appreciated.

[tobee43]

i want to say you are ok, but maybe not. what you need to do is consult your accountant and or tax preparer. consumers who receive the 1099-C cancellation of debt forms should immediately take them to a tax preparer or tax adviser. it use to be far easier to determine a few years back, now it's not always so cut and dry.

most cases one just attaches a form 982 to your taxes and you are alright. however, who is the 1099c from the original creditor or a third party? do not settle anything until you find out if you qualify to any number of reasons that the form 982 will cover. most likely you will fine as long as that form is attached.

oh! and welcome to the board!

[bigmomma78]

i want to say you are ok, but maybe not. what you need to do is consult your accountant and or tax preparer. consumers who receive the 1099-C cancellation of debt forms should immediately take them to a tax preparer or tax adviser. it use to be far easier to determine a few years back, now it's not always so cut and dry.

most cases one just attaches a form 982 to your taxes and you are alright. however, who is the 1099c from the original creditor or a third party? do not settle anything until you find out if you qualify to any number of reasons that the form 982 will cover. most likely you will fine as long as that form is attached.

oh! and welcome to the board!

Thank you so much for your response. I reached out to my lawyer for help, but he will not return my e-mails. I have received 2 1099c from original creditors. I have also a letter from a collection agency for one of my debts asking me to confirm and settle the debt, but no 1099C from them. I just don't know what to do. I will consult a tax preparer, but wanted to wait until I had received all of the 1099c. I wasn't sure if they had to mail them by 1/31 or not. I will probably wait until mid-Feb before finding a tax person. I'm not sure whether to file or try to settle. If I do decide to settle, do I ask my lawyer to help or should I settle on my own with the creditors? Will they take about a 1/3 of the original amount? I really don't want to file, and I dread the paperwork of it, which is why I didn't file a long time ago. I'm just not sure what to do. And would I settle with the people who sent the 1099c, or have they already forgiven the debt?

[bcohen]

Settling debts is almost never in your best interest, and even when done correctly cannot provide the closure that a Chapter 7 discharge provides. If you can qualify for Chapter 7 bankruptcy--either now, or in the future--then that is your best bet by far. Instead of worrying about what the creditors will agree to accept, whether or not they will try to resell the remaining balance in the future, etc, why not file for bankruptcy and settle all your debts for $0? BTW, while you are planning to file, you can wait to receive and spend your tax refund, spend down non-exempt funds, etc, so that when you file, you don't actually lose anything.

Additionally, please be aware that the mere fact you received 1099-C's does not mean that the creditors will stop trying to collect the debts. Some might, but others will just sell the debt, and you will still owe the money--even if you claim it as "income" and pay taxes on it. Hopefully, you are legally "insolvent" so you can avoid paying taxes on the phantom "income", and when you file for bankruptcy, still include the debts, even if you believe they were "forgiven".

[bigmomma78]

I'm not sure I can file anymore. I retained my lawyer 4 years ago and didn't ever turn in the paperwork. Now he won't return my emails but I paid the retainer in full. I'm not sure if I make too much to qualify. I was spending a lot of overseas meds that I'm scared they will say are unnecessary because I didn't hasn't a doctors prescription. There is a lot involved. I don't want anyone to know I filed. Do they put it in the newspaper? I'm so scared I'll never get a Loan again and it will ruin my credit. I thought if I settled it was like I was at last making an effort to try to pay back some of the money. These 1099c scared me....lol

[bigmomma78]

Yeah I'm scared I won't meet the insolvency requirements. I'll have to check what they are for the state of Virginia.