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Law Educator, Esq.
Law Educator, Esq., Lawyer
Category: Consumer Protection Law
Satisfied Customers: 116716
Experience:  Attorney experienced in commercial litigation.
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I have a Cancellation of Debt (1099-C) letter/form Bank of

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I have a Cancellation of Debt (1099-C) letter/form Bank of America. I am trying to qualify for a home loan and the bank wants more information from Bank of America as this is still on my credit. I called BOA and asked them to remove the negative credit from the report. BOA said they will not remove this from my credit.
Although I have the letter/form from Bank of America stating that we are not responsible for this debt, the mortgage company will not accept this letter without BOA reporting this to the credit bureau.
I need advice on how to proceed.
Thank you for your question. I look forward to working with you to provide you the information you are seeking.

If the bank has written off the debt and has provided you a 1099-c for tax purposes, it does not mean they cannot subsequently sell the debt off to junk debt collectors who can then try to collect on the debt. The debt is still valid unless the bank has sent you a letter stating that they are discharging you from liability for the debt and it is for this reason that the new bank is being cautious. If you have a letter stating you are no longer liable for the debt, then you need to take a copy of that letter and write a dispute to the three credit bureaus pursuant to the Fair Credit Reporting Act with a copy to BoA, demanding that negative remarks be removed from your credit report and the debt be classified as discharged for less than full payment. Unfortunately, this is going to delay your loan, because the credit bureaus have up to 45 days to review your dispute and make a decision as to whether or not the report is accurate.

If they refuse to remove the comment or modify it, then I am afraid your only other recourse is that you will have to sue BoA for discharging the debt and failing to report it as discharged in violation of the FCRA and under the FCRA you can seek all actual damages you suffered plus attorney's fees for them making an inaccurate report.

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Customer: replied 4 years ago.

Can I sue them even if they sold the debt? The 1099 c states FIA card services and BOA.


Thank you for your response.

I am afraid you cannot sue them if they sold the written off debt, they have a right to sell a debt, even though they have written it off for collection. There is a difference between writing a debt off and sending the 1099-c and discharging the debt completely, so it depends on exactly what they did with the debt, since most customers mistake a written off debt for one that is completely discharged. If they sell a completely discharged and forgiven debt, then you could sue them for breach of contract for selling the forgiven debt.
Customer: replied 4 years ago.

Okay, the 1099 c states the debt was discharged and the borrower was not personally liable for repayment. What does that mean?

Thank you for the response. This is one of the most confusing things for the courts as well as consumers. The issuing of a 1099-c means the bank (original creditor) cannot collect the debt. However, that does not mean they have forgiven the debt, that means they are simply saying they will not hold you liable for payment any longer and are writing it off. The bank can, if they choose, sell the debt to a junk collector who can still seek to enforce the debt and if they do, then anything you are forced to pay on it would be then claimed on your taxes since you received the 1099-c. Most times the bank will not sell them, but I am afraid that they can do so and this is why the mortgage company wants assurance that the debt has been forgiven and forever discharged. You need to write a request to BoA demanding a release from the debt or satisfaction of debt letter, which would be a complete release.
Customer: replied 4 years ago.

How much would you charge to write this letter to BOA on your stationary?

I must apologize, but that would constitute representation which is forbidden by the rules and terms of this site and you would have to engage a local consumer protection attorney to do that for you. Generally they will charge about $150-$250 for writing the letter although some might charge less.
Customer: replied 4 years ago.

Okay, Thank you. Sorry but one last question. Do you think it would be easier to call FIA and negotiate a small settlement? If so is this something I can do on my own?

Thank you for your response.

You can call BoA and negotiate some small settlement without an attorney in exchange for them issuing a satisfaction of debt letter if they are willing to negotiate. If BoA is not willing to negotiate then you are going to have to go through court to get the court to order the debt classified as satisfied.
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