I settled out of court with Midland Funding as the third party creditor in 2007. We all know that that a third party creditor pays pennies on the dollar for these accounts so I'm confident Midland Funding suffered no loss in this settlement but rather gained monies.
I then receive a 1099C cancellation of debt that Midland Funding reports to the IRS that they suffered a loss at over $15k which in turn is now considered my taxable income!
The attorney office that represented Midland Funding informed me that this "issue" should have been resolved in the settlement, but because I represented myself, I of course was not aware there would be any further issues, nor did the Honorable Dan Wilson impart any justice to me in this matter. I am confident too that as a judge, he is full aware of the workings of all that pertains to these type of suits.
After calling Midland Funding and being asked if my call was about the 1099C, it struck me that this is common practice that allows these corporations to report "suffered loss" as well not reporting any "gain" through government loopholes!
So don't settle without an agreement that there be be no 1099C cancellation of debt reported to the IRS!
0 comments