How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Dave Kennett Your Own Question
Dave Kennett
Dave Kennett, Lawyer (JD)
Category: Legal
Satisfied Customers: 27689
Experience:  25 years experience in general law, including real estate, criminal, traffic, and domestic relations
Type Your Legal Question Here...
Dave Kennett is online now
A new question is answered every 9 seconds

I just had a collection agency call for a debt that is over

This answer was rated:

I just had a collection agency call for a debt that is over 10 years old. The Oregon statute of limitations is 6 years to sue for judgment. What's more, I had another agency contact me back in 2006 and at that time I had no record of owing the debt so I certified them to validate the debt. They responded that it would take them 90 days. Nothing ever came from them and they went thru the same dance again in 2006 and again I requested validation. Nothing came. Fast forward to this week when a different collection agency called naming the same original debt that had ballooned to 30k from 20k (again I never borrowed any such amount). Back in 2002 there wasn't much around about identity theft but I suspect I was a victim of it then. Now I know the debt isn't collectible in court but this 2nd agency is threatening to have a 1099-c sent to the IRS. I called the IRS and they said only the original debtor can send a 1099-c, and that any dispute about the validity of the debt was between me and the original debtor (a bank I don't think is even around now). So perhaps I have no worries, but the idea of having to pay taxes on 30k that I never borrowed shook me up some. Should I do anything? Thanks
Dear JACUSTOMER - The original debtor would have to send the 1099 since the junk debt buyer was never out the money for the total debt and paid only pennies on the dollar for the right to collect. So I see no reason you would have any tax liability at this late date and if a 1099 was sent you could contest the validity with the IRS if necessary. As for the statute of limitations, it doesn't prevent a suit from being filed but it is a legal defense to any suit filed so long as you do not sign any settlement agreements or make any payments within 6 years. A lot of these less than honorable collectors try to trick people into making some type of payment agreement or making a payment which renews the SOL for another 6 years. So the best plan is to ignore these people and if they file a suit you then need to file an answer and assert the SOL. That should be a perfect defense to any lawsuit.
Customer: replied 3 years ago.

Yes, I'm familiar with the tricks that debt collectors sometimes play and I do know from the IRS that the original debtor would have to send the 1099-c. I guess there's no time limitation for them sending the 1099-c, but if they sold the debt to a collector can they still send a 1099-c years later? The IRS wouldn't admit to any dispute of validity for the debt, but according to their site they can raise the issue up to 3 years later. The debtor is supposed to send a 1099-c to the IRS and the creditor but doesn't always do the latter, so the poor taxpayer gets a big surprise a year or two or three after filing. Since the original debtor never came up with validation of any debt I don't see how the IRS could think it valid without same. Perhaps I'm just worried whenever the IRS gets involved.

Obviously I would have no way of knowing what has or hasn't bent sent to the IRS but if the original debtor is no longer in business and the debt is 10 years old it is unlikely that anything has ever been sent. I would think the IRS would know if they have any record of receipt of a 1099 for you and if they don't and it's been 10 years then my opinion is that you have nothing to worry about.
Dave Kennett and 9 other Legal Specialists are ready to help you
Customer: replied 3 years ago.

Sorry if I wasn't clear about one thing. The IRS said if I hadn't rec'd notice by now from them that the debtor had sent a 1099-c then it hadn't been sent. My question and worry is this: what do I do if I receive a 1099-c before next February? Do I have any recourse? Thanks.

You would have to take that up with the IRS and contest the fact that the 1099 was legitimate, not that you didn't owe the debt. The IRS could care less if you are disputing a debt but if the debt doesn't exist then the 1099 is bogus. So you would have to use the argument that this is not an original creditor and that the 1099 is bogus.

Related Legal Questions