Legal Question in Credit and Debt Law in Pennsylvania

There is no answer to your question. Some credit card companies or banks never issue a 1099c. Others do so. I cannot figure out any particular pattern as to why some creditors report and others don't.

Regardless of whether a debt is reported or not it can still be collected or resolved. If a 1099c has been issued and the debt is later settled, an amended 1040 may need filed if you paid tax on the amount written off. You have 3 years to file amended returns.

I suppose the problem arises if no 1099 is ever issued. You need to speak with your CPA as to whether you need to report the written off debt or not. I would not do so because there is always the possiblity that you can be sued on the debt, even after the statute of limitations has run and then you have to worry about amending your returns if the debt is later resolved.

Generally, a creditor or junk debt buyer has 4 years in PA to bring suit against you from the time that the debt was last paid, assuming that the debt was created in PA and you still live there. Different states have different statutes of limitations, although most things like credit cards and loans are between 4-6 years (unless its a mortgage debt).

If a 1099c is ever issued, you may be able to exclude all or part of the forgiven amount from your income using form 982. You will need a competent CPA to assist you in filling out the form as you have to complete a worksheet based on your assets and debts. The IRS has a lot of helpful information at their website - www.irs.gov. Look up IRS form 982, tax topic 431 and publication 4681. Take these materials to your CPA when you go to file your taxes.

I hope this helps.