1099c

Yes, anytime you settle a debt for less that the amount owed, the fedreal goverment states you must claim it as earned income. 1099c is the tax form used to claim the earned income.

My understanding is that even though you paid taxes on the charged off amount, that doesn't cancel the legal obligation to pay the debt. I'm not sure though how you would reclaim that amount on your taxes if you did pay the debt??

the for is titled - cancellation of debt. you are telling me that when they cancel the debt it is still collectable? that doesn't sound right and people falling into this category will have this thrown out when it is challenged in court.

Here is a link to a discussion thread that seems to indicate that the debt is still collectible (the thread that I remembered reading a couple of months ago):

http://www.debtconsolidationcare.com/collection-agencies/debt-cancellation.html

However, here is a link to a discussion thread that seems to indicate that the debt is no longer collectible:

http://www.debtconsolidationcare.com/collection-agencies/about15326.html

If anyone has any definitive experiences with the issue, I'm certainly curious to know the outcome . . .

Here's another 1099-C thread

http://www.debtconsolidationcare.com/tax-debt/1099c-form.html

I don't see how it is collectible. When the company charges off the debt and agrees to take a lesser amount for the debt or forgives what it owed--they will send a 1099 to you so that you can claim it as income on your taxes. You should have some kind of letter that shows they agreed to take the lesser amount and settle the debt. If you can't prove this--you may be stuck.