One Final try before BK. Plz Critique my final settlement letter (short!) thx

[joshuagraham]

The 3 year period of inactivity triggered a mandatory 1099-C form. They sent it to me in the mail in January of the following year. The entire amount of the debt (since I didn't pay them anything at all) and all the interest and late fees were canceled debt, and were about to be treated as income to me. OMG!!! Noooooooooo!!!!!

I freaked out and worried about it, and asked a lot of forums about what to do about it and got conflicting answers.

Finally, my Dad called from Oregon and when I talked to him about it, he said go see a tax preparer.

So, I did. She figured it out after just asking me a few questions, printed out the proper form and the proper paperwork, then did my tax return for that year, charged me a fee, and off the form went in the mail to the I.R.S.

I'm curious what form that was.

[slvnomore]

I really appreciate all the replays, so many different stories so many ways it can turn out. Its kind of frightening like if you dont make the right move you can blow it.

I asked about the audit because if the medical things and the money wasn't enough my acct. of 20 years died last week and they shredded all my old taxes. - thats why the audit spooked me. I have never been audited as a SE person but this would be horendous timing.

If I offered to settle for a small amount like this, some people say that would tip their hand and cause them to sue right away before i was prepared for a BK.

I was hoping i could get them low enough so I could do a settlement. but the specter of an audit is frightening.

thanks again for all your welcome advice... ; )

[bcohen]

Like I (and many other people) have already told you: the potential for an audit is the least of your problems. You simply cannot afford to settle, and have absolutely nothing to gain from trying.

[ValleYum]

I'm curious what form that was.

I believe it is IRS Form 982. Check with your accountant or attorney as to the best way to use this form.

[slvnomore]

I hear what your saying and i appreciate your opinion thank you.

So if i decide not to settle at this time what can I send them in writing that will stall them but not admit to the debt or give them to much info, so i can find out more about positioning for BK? They are calling 5 times a day as its about to go into charge off. Thanks!

[lillymarlene]

Speaking from my own experience, I found Cease and Desist letters to work well at holding some of these bill collectors off for awhile. Starting in 2009 I started getting phone calls, and letters from various collection agencies. So I would just send off a letter that I would only deal with the original creditor. Some of those banks must have passed me around for at least 1/2 of a dozen times, and I also think that I spent a small fortune on certified mail for the C&D's. LOL Then about a year later Cap One and BOA decided to sue me on 2 of my smallest balances.

[GoingDown]

Speaking from my own experience, I found Cease and Desist letters to work well at holding some of these bill collectors off for awhile. Starting in 2009 I started getting phone calls, and letters from various collection agencies. So I would just send off a letter that I would only deal with the original creditor. Some of those banks must have passed me around for at least 1/2 of a dozen times, and I also think that I spent a small fortune on certified mail for the C&D's. LOL Then about a year later Cap One and BOA decided to sue me on 2 of my smallest balances.

I save certified mail for only the most extreme situations. Most of the time, simply looking up their website online, finding their "contact us" section, then finding their email address, and sending the cease and desist letter by email works fine in most cases. It's essentially free that way. And you still have proof that you sent them a cease and desist letter.

[GoingDown]

I believe it is IRS Form 982. Check with your accountant or attorney as to the best way to use this form.

Yep, good old Form 982, and there was a worksheet that the tax preparer also sent along showing that I had more liabilities (debts) than assets. And it was all sent together with the tax return for that year. Worked fine for me.

I was stressed out over essentially nothing.

[nceguyfromne]

Creditors are not in the business of signing debtor-generated contracts because a) they don't have to, and b) it's never in their best interest. I'm sure it's happened at some point in history, perhaps with smaller creditors, but I've honestly never heard of it in practical application with a bank or credit card company. If you really want to show your resolve, I suggest simply calling them and telling them you need them to mail you a better settlement offer or you unfortunately won't be able to pay them anything. No need to tell them you're judgment-proof, collection-proof, contemplating bankruptcy or anything else. They've heard it all before and are no more well-advised to believe your threats than you are to believe any of theirs. They are going to run the same, objective asset determination on you that they do on everyone else and determine that you're either a good candidate for a judgment or a bad one. They have no emotional stake in your outcome. It's all business. All numbers.

With any luck they will deem you a lost cause for collection and write it off.