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TexLaw, Attorney
Category: Legal
Satisfied Customers: 4430
Experience:  Lead trial/International commercial attorney licensed 11 yrs
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I went through debt consolidation and "graduated" according

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I went through debt consolidation and "graduated" according to the company I went through. Recently, I applied for a loan to start building my credit back up but was rejected because I still had an unsettled debt on my credit report. The company that said I still owed them money had sent me a 1099C tax form several years ago. I and my debt consolidation company were under the impression that this meant they cancelled the debt and it was no longer owed. The credit card company said that is not the case, that they have to send the 1099 form out due to tax laws, but I still owe them the full debt and therefore, it will remain on my credit report as unpaid. Which is correct? Was the debt cancelled or do I still owe it? Thanks for your clarification on this!

Thank you for your question. If the creditor settled the debt and sent you a 1099 for the shortfall, that debt is settled and can no longer be collected. So, int this case you do not still owe the money. The credit card company is not correct.

Do you have any of the written documentation from the creditor which settled the debt with you and sent you the 1099?

You should next contact the credit reporting agencies and send in a dispute on the debt still being listed on your credit history. Once this is removed, any future potential creditors will not be able to use it as a basis for an objection to lending you money.
Customer: replied 4 years ago.

Yes, I do have a copy of the 1099 form. Thank you for your help. I will start working with the credit reporting agencies.

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Best Regards,
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